January 22, 2019
Top 5 Misconceptions of Short-Term Loans
The internet is a wild place, and on its frontier is a lot of misinformation. Many of the sites and social media pages through which people get their information are no better than supermarket tabloids. The sad truth is, people believe it. Statista reported a startling statistic about a viral fake news story regarding a lottery winner being engaged with nearly two trillion times. With those types of statistics, it’s easy to see why so many people choose to believe what they hear about short-term loans. However, misinformation about short-term loans pre-dated the internet, and it is likely that misinformation about short-term loans will outlive the internet, as well.
Title loans. Payday loans. All different types of short-term loans have a bad reputation. From these type of lenders being referred to as pirates or worse to stories about those who have been “swindled” by short-term loan providers, the stories that you hear about short-term loans are often far from pleasant. But, when you think about it, a person is more likely to complain about something they didn’t like than praise a company they did. Take it from a trusted short-term loan business: the vast majority of the bad things you’ve heard about short-term loans are rumors at best.
Here are the top five misconceptions we’ve heard about short term loans and what you should expect from these types of lenders instead.
Claim #1: Title lenders do not check your credit report and therefore do not care about whether or not you make payments. They are only interested in getting your car so they can sell it.
The Truth: Many title lenders do check your credit on free credit sites like Credit Karma but do not run an official report. Running a report can hurt your credit, and we realize that many of our customers are interested in working with us to better the credit. But just because we don’t do lending like a bank doesn’t mean we aren’t careful about how we lend. We verify your income, check your references, and ask you honestly about how much you can afford to pay each month. Based on this we lend on a short-term basis in a way that is comfortable for our customers and also makes them want to work with us again.
Claim #2: Title loans and other short-term loans have sky-high interest rates and short repayment terms designed to make you lose your car or other owned collateral.
The Truth: Mid-South Title Loans is extremely clear about our lending practices. Initially, our credit rates might seem higher than those that come from the bank. However, the bank is basing your interest rate off your credit score. Because we don’t run credit checks, our risk of losing money is higher, so our interest rates often reflect the perceived risks. However, our repayment terms are much shorter than traditional loans, which ultimately equals out. Over the life of a traditional, credit-based loan, a borrower can expect to pay back hundreds to thousands in interest. Short-term loans are repaid over a much shorter period which potentially means thousands of dollars saved in interest payments over the life of your short-term loan. The truth is – it stings a little at first, but ultimately you’ll be breathing a sigh of relief.
Claim #3: Only people with bad credit take out title loans, and because of their bad credit they pay more.
The Truth: People from all walks of life take out short-term loans because almost everyone experiences the need for money they don’t have. Our interest rates are figured out using the information our customers provide us — including the state of their car and the amount of money that they make. To make payments more comfortable for some of our lower-income customers, we sometimes extend the period of their loan, which ultimately means they do pay more interest. However, this is something that even student loan companies do and is not exclusive to the short-term loan industry.
Claim #4: All short-term lenders are untrustworthy, and none are worth your time.
The Truth: There are untrustworthy sorts in all industries, and it is up to the consumer to research the company before doing business with them. The same goes for short-term lenders. Unfortunately, short-term lenders flooded the market after the 2008 economic crisis, and not all of them were good. This influx in unreputable lenders followed by the increase in internet usage allowed reviews about short-term lending institutions to run amok, which in part gave them their reputation. Mid-South Title Loans is one of the businesses you can trust to give you honest service, reliable employees, and fair rates. With ratings listed from real customers on our site, you can see what type of service you get from our locations.
Claim #5: Taking out a short-term loan is terrible for your credit, and you should avoid taking one out if you have poor credit.
The Truth: Title loans, payday loans, and other short-term lending options actually help your credit when you need it! The myth that short-term loans are bad for your credit is a result of people not paying their loans per the terms. As with any loan, failure to pay a loan per the conditions of the agreement will result in the lender reporting the payment failure to credit bureaus. Lenders and borrowers avoid this by working together to figure out lending terms that do not put a financial strain on the borrower. Successful loan payments are reported to credit bureaus, which ultimately raises the credit score of short-term loan customers.
Don’t let wild claims stop you from getting the cash you need to take care of unexpected financial situations. Mid-South Title Loans in Memphis, Tennessee provides short-term loans to Tennessee residents. Make an appointment at one of our three Memphis short-term loan providers: 1680 Winchester Road can be reached at (901) 346-1040, 4965 Summer Avenue can be reached at (901) 821-9211, and 2798 S. Perkins Road can be reached at (901) 794-5460. We look forward to doing business with you.