There are a handful of reasons why big banks don’t offer Florida title loans. We get this question quite often here in Florida. Many applicants would prefer to get cash from their local bank and that’s understandable. Here in the Sunshine State, there are hundreds of established banks that provide emergency cash loans. The problem is that many of these lending institutions and credit unions aren’t going to provide car title loans. Let’s get right into the facts to determine why banks don’t offer auto title loans in Florida.
Do Banks Offer Car Title Loans in Florida
To start off as to why really a bank might not give you a car title loan, it is critical to understand what a secured and unsecured loan is. In the simplest possible way, a secured loan has a piece of collateral that the bank will seize in the event of a default. They have cheaper interest rates but are comparatively riskier. A standard bank loan does not have any collateral to protect it; so that would mean they would charge a penalty for not paying the loan in time. A car title loan is a secured loan while a personal loan is an unsecured one. As an unsecured loan does not take collateral into consideration, in the event of a default, lenders tend to use a borrower’s equity as security.
In a general manner of speaking, an unsecured loan will be available to an individual who has a good credit history. But the absence of collateral also causes the bankers to charge higher interest rates, sometimes up to 300 percent. Most banks in Florida are regulated by the Florida Office of Financial Regulation. This means they must adhere to strict guidelines which regulate the types of loans they can provide.
These factors often cause banks to stick with unsecured personal loans rather than giving out car title loans. While they require more credit, they allow the bank to be comparatively more secure and also gain more monetary profits. Any licensed bank in Florida will not question the reason you require the money and also how you will spend it, this puts the onus on the borrowers, making it quite risky for them while more credible for the bank. They also have a ton of paperwork. However, if you are taking up a car title loan in Miami or looking for a loan in Pensacola with your automobile as collateral, here are some factors you should be aware of.
A Credit Union Will Not Let You Use a Pink Slip as Collateral For A Title Loan
In comparison to unsecured loans, it is easier to obtain a secured loan as they are not so picky about great credit scores. This is because of the fact that there is collateral or a paid off car title in place. However, the possibility of default remains quite relevant which gives them more reason to avoid it. Second, the banks in Florida get to charge higher interest rates on the loans that they give out in case of a personal loan. Third, a bank has to follow way more complex regulations and background checks in comparison to that of auto title loan companies. In case your vehicle loses value due to any form of damage, it may then be tricky for the bank to cover it up.
If you ever find yourself in a situation where you need emergency cash you should first check with your local and state government. Here in Florida, we know of many cities like Miami and Fort Lauderdale which provide hands-on budget help and workshops. You can also look into the free resources provided by the Florida Department of Financial Services.
The risk of losing your vehicle’s collateral can lead you towards a personal loan. You may not quite realize the possible implications of it in comparison to lenders that offer title loans in Florida. Despite the interest rates and credit scores, a borrower might want to go ahead with a personal loan. And banks might prefer it due to the credit factors involved in the whole process of giving out such a loan. Online title loans are basically for people who need cash fast. Most have bad credit, and have no Florida bank account or checking information. But they should take it only if they are confident of repaying before the due date or they might lose their car.