Where do you turn when unforeseen financial emergencies arise? Occasionally, it’s one large cost while other times it is the sum of smaller ones. Has the doctor prescribed a medicine that your insurance doesn’t cover or you need to pay the mechanic in order to get your car back? It is a simple elementary cause and effect lesson. Events and actions are related. The result of many bills may drive you to obtain a car title loan or running to friends and family looking for a financial solution.
Financial consultants suggest that their customers save at least 6 months of budgeted costs so if there is an emergency down the road, the money will be there to use in order to save the day. It sounds like an ideal plan in theory. However, when someone is living paycheck to paycheck, saving money is not an easy task. The short-term loan industry is thriving and it’s the direct effect of these deep-rooted issues, most people do not have a savings account and they never mind 6 months’ worth of living costs.
What Does The Average Person Do When Costs Does Not Fit Into The Budget?
- Conventional loans from credit unions or banks are available for those with favorable credit scores.
- Most people will turn to credit cards in order to keep up with costs which are not covered by income.
- Payday loans attract those with bad or no credit.
- Those who are homeowners have a few choices. Second mortgages are often used to help make payments. Others may sell their home and move into something more affordable.
- Some people consolidate their debt to lower the monthly demand.
- Car title loans provide more cash than a payday loan. These loans are only available for those who own the title of their vehicle.
- Bankruptcy is the last option for those who owe multiple times the amount earned.
- Debt settlement will lower monthly payouts, as well as a third-party company, works at settling a debt for a smaller amount.
Credit counseling services are available to assist people in learning to work with their income for living expenses. These services will help people to create a budget that works. It always takes effort by the debtor to cut back on expenses. There was a study result which showed that short-term money solutions such as cash advances, payday loans and car title loans are used instead of having to cut back. When debt piles up and your credit does not have any access to cash, these short-term loans provide momentary relief.
Car title loan is an example of a secured loan. Although the car loan business is slowing down because of the credit crisis in the economy, car title loans are a rapidly growing industry. The way the process works between the lender and borrower is very simple. The collateral that is presented in this scenario is the title of the borrower’s vehicle. When securing a loan like this, it requires little effort and time. It usually involved nothing more than just filling out a simple form either over the phone or online through the internet.
Most loans that you get at any title loan agency will cover up to 50% of the value of the vehicle even though this depends on local or state regulations. In some cases, the agency may also ask that the borrower show evidence or proof that there is an ability to repay the debt by showing proof of income. Although the industry is in its growing stages, but there is great potential.