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A loan is a financial transaction in which person A lends person B funds with an agreement that it will be repaid with interest over a fixed period of time. There are a countless numbers of different types of loans. Some utilize collateral to secure the loan terms, while others base terms and conditions on certain credit history criteria. Ultimately, a loan is the lending of funds in exchange for a repayment of those funds with interest for an agreed upon time.
Lending has been around for centuries and is a staple in human civilization. Babylonian merchants were said to have used loan type systems to provide grain to farmers and traders. Moneylenders facilitated the first trades between the Christians of Europe and the Arab world of the East. Lending of loans allowed the Spanish to fund their exploration of the New World. Without the lending provided by other European countries, the travel might not have been possible. Even the earliest English are said to have had loan systems in the establishment of America.
These days, lending seems second nature. It is mutually beneficial, enabling people without sufficient credit history or high-end collateral to secure the funds they need. Loans are regulated by contracts which have specific terms and conditions. Contracts are governed by the laws of the states and the federal government.
Financial lending laws protect consumers from illegal and fraudulent practices. Interest rates and other terms and conditions are controlled to offer consumers reasonable lending terms, in addition to financial protection.
Interest is the fee for using someone else’s money. Money that you place in the bank may earn interest because the bank is lending your money to others, sometimes to provide loans. When you receive a loan (from a bank, an alternative lender, or anybody else) you pay certain interest for the right to use the lender’s money.
The amount you’ll have to pay in total is calculated using three pieces of information: loan amount, the loan term, and the interest rate. Another way of looking at this is: you’ll pay back the amount you’ve borrowed (called the ‘initial’) and the amount of interest accrued during the loan term (called the ‘premium’).
Here’s an example of a $1,000 loan to be repaid in one year at an interest rate of 5%. The total amount to repay equals the initial plus the premium. Please note that this is just an example, and does not necessarily reflect the standard rates you will find with an actual lender.
Every loan has different types of interest rates and they tend to require different stipulations. Here’s a brief introduction of the different kinds of loans that may be available.
Another kind of alternative loan is an auto title loan. Auto title loans use the free-and-clear title to a qualifying vehicle to secure funds. If you have a free and clear vehicle title, you may qualify for an auto title loan. Auto title loan lenders are not as concerned with credit history as they are with a variety of other factors such as: vehicle equity value, vehicle mileage, and the applicant’s income.
The application process is also more timely and convenient than most traditional lenders. Borrowers typically receive their funds in as little as one business day. As long as monthly payments are made on time, borrowers face no driving restrictions to the vehicle which they received the auto title loan.
Alternative loans are closed-ended loans. The borrower receives the funds up-front and agrees to an interest rate and loan term. There are two types of alternative loans typically utilized: payday loans and auto title loans.
A payday loan is a short-term loan offered by lenders which allows borrowers funding that is to be paid back by their next payday. Sometimes they’re also called cash-advance loans.
Most traditional and conventional loans require that the borrower spends their funds on a specific thing, like a house or vehicle payment. This is known as a purchase money security interest. Funds received from payday loans may be spent on anything the borrower chooses. Another advantage to payday loans is that lenders are not as concerned with the borrower’s credit history. You’ll provide your social security number, your name, your banking information and contact information, and then you’ll receive a quote!
Myth 1: Money Lenders Can’t Fund in Less than 30 Days
Today, most alternative lenders can get their customers their funds in as little as one business day. The key is getting all your qualifying documents submitted in a timely fashion. The earlier in the day you submit your documents, the sooner you’re likely to receive funding.
Myth 2: Loans are Expensive in the Long Run
Though some lenders charge unreasonable rates on their loans, here at Loan Reviews our goal is to direct our customers toward reliable lenders offering loans at competitive rates. We pride ourselves in getting to customers, the information they need to navigate through the world of lending with confidence.
Myth 3: People Who Need Alternative Loans are Desperate
The current generation is more hesitant to take on debt than any generation since the Great Depression. The fact of the matter is that loans are mutually beneficial. The lender benefits with interest, and the borrower benefits by getting the funds they need right away. Alternative loans have the advantage of being closed-ended. Customers know how much they’re going to receive, how much they’re going to pay in interest, and how long they have to make payments.
Myth 4: Lenders are Untrustworthy
This is a typical notion. Throughout history, untrustworthy characters in literature, film, and drama have been moneylenders. Here at Title Loan Reviews, we understand why people are cautious when choosing a lender. We’re talking about money here, and you can’t find the right lender through trial and error.
That’s why we include real reviews from customers just like you on all the lenders we list. You’ll be able to choose between lenders that consistently meet customers’ expectations, and avoid those that don’t. We’re all about putting power in the hands of borrower. If that sounds like something you’d be interested in, why not give us a try?
Myth 5: Alternative Lenders Are Unregulated
The historic advantage of alternative loans is that they are subject to far fewer regulations, and therefore customers tend to get their funds much quicker. That’s still the case, but recent changes in federal law have also led to more oversight. Instead of making alternative loans more difficult to receive, these new regulations have set up certain standards to protect consumers while still providing the funding they need. With so many alternative lenders out there, consumers have lots of options and that’s undoubtedly a positive thing. But it can also feel overwhelming. That’s what Title Loan Reviews is all about. We’ll help you find the best lenders in your area.
If you have a question that hasn’t been answered yet, don’t miss our FAQ page, where dozens of common questions have been answered by our staff here at Title Loan Reviews. How much may you qualify for? Can you get an auto title loan on a motorcycle or boat? Do banks do auto title loans? Don’t wonder any longer! All the information you need to make an educated decision is right here on this site.