BlogBlogThe Fundamentals of Loans and Borrowing

The Fundamentals of Loans and Borrowing

GuideAt some point in your lifetime, you will find it necessary to borrow money. It may be to finance a car, a house, or your college education. Even though most people do borrow money at some point in their lives, they most likely do not understand even the basics of loans and how they work. Here’s a quick guide.

 

The Components of a Loan Transaction

 

All loans, no matter what type, consist of three elements: the interest rate, the term, and a security component. The interest rate is the price or cost of borrowing. A financial institution does not lend you money for free. The interest rate is what they charge and the rate may be fixed or it may be variable over time. Interest rates will vary depending upon the type of loan and how much risk is involved. The riskier the loan, the higher the interest rate.

 

The term of a loan is the amount of time that a borrower has to repay. Different loans have different terms. Car and personal loans typically have shorter terms such as one year to five years. Student loan terms are usually 10 years, while fixed rate mortgages are for 15, 20, or 30 years.

 

All loans are either secured, meaning some form of collateral is offered, or unsecured. A secured loan, such as a car title loan from Embassy Loans of Florida, offers a vehicle as collateral in order to complete the loan process. An unsecured loan does not require collateral and since it is riskier, often has much higher interest rates.

 

Types of Loans

 

There are all sorts of loans available from a number of financial institutions and even private lenders. Most people are familiar with banks and credit unions offering home and car loans. These institutions will also loan money to buy items such as boats, motorcycles, guns, jewelry, and much more. What many people may not know is that they can also use their car in order to obtain a loan.

 

A car title loan can be obtained by anyone who owns a car that is complete paid off and has the title. The credit requirements are very lenient, since the loan is not based on an individual’s past credit history. A person who has a newer model vehicle (preferably 10 years old or less) that is paid for is the perfect candidate for an auto title loan.

 

One of the more common types of loans is the student loan. Thousands of college students across the country use student loans, which can be paid off after a person finishes school, in order to obtain an education.



Embassy Loans is a leading provider of auto title loans since 2005

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Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

Monthly Interest Rates range from 1.5% to 2.5% (18% to 30% APR), with 15-18 Month Terms.

No Prepayment Penalties!

Embassy Loans uses “Title Loans” for advertisement purposes only and provides auto equity loans. Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” under Florida Statute 516 and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

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Frequently Asked Questions

What is an Auto Equity Loan?

An auto equity loan, sometimes known as a car title loan or a car equity loan, is a type of loan that allows you to borrow money by using your vehicle as collateral. The loan is secured by your vehicle, meaning you agree to use the equity in your car to back the loan. 

What is an Unsecured Personal Loan

An unsecured personal loan is a loan that does not require collateral. Funds are provided based on your credit worthiness and your ability to repay. 

What Is the Credit Builder Program

The credit builder program is designed to help individuals establish or improve their credit score with the primary purpose of building a positive credit history through regular payments.

Can i have more than one Loan at a time?

Embassy Loans can only extend one loan at a time and it’s advisable to start with one and focus on making payments in a timely manner to prevent default.

What happens if I miss a payment?

Missing a payment can have negative consequences, including late fees, a drop in your credit score, and potential default on the loan. Consistent, on-time payments are crucial to benefit from the program.