1 800LoanMart Explains the Difference between Amortized & Interest Only Loans
Many loan companies offer interest only loans that have a balloon payment at the end of the agreement, 1 800LoanMart offers affordable amortized loans to help the customers pay off their loans instead of being buried in debt from balloon payments.
By: 1 800LoanMart
First off, an amortized loan means that the principal amount of the loan is repaid throughout the life of the loan through payments that go towards both interest and the original face value of the loan (the principal). Upon the final maturity date, the entire principal amount is fully paid off, and interest is collected by the lender throughout the life of the loan. 1 800LoanMart offers car title loans that are fully amortized, so that each payment made has part of the payment set aside for interest while the rest is used to pay off the principal. Amortized loans are designed to help the borrower pay off the loan in a set amount of time, and the borrower isn't forced to pay one lump sum in the form of a balloon payment like the ones assessed in an interest only loan.
Interest only loans are used by other loan companies to advertise “low monthly payments” in the hopes of capturing their target audience's attention. What these loan companies won't tell you is that the “low monthly payments” are only going towards the interest for the given month. Not once will any of the interest only payments go against the principal loan amount, that is until the large balloon payment kicks in at the end of the loan's final maturity date. At the time of the loan's maturity, a final balloon payment will be due, in which the borrower must pay off the entire principal amount in a whopping payment! So those “low monthly rates” were indeed affordable, and most customers are unable to pay the final payment of the total principal amount, thus putting them in a tough place.
Title loan companies who offer interest only loans will put somewhere in the loan agreement that if the balloon payment is not paid at the given time (the final maturity date), then the company will repossess the car and still force the borrower to pay the principal amount, and then this time charge even more interest on that past due principal! Now you can see how people who are caught up in the mess of interest loans are unable to get out of the debt enforced by the loan company because they not only have to find a way to pay the initial principal back to the company, but they also completely lose their vehicle that they got the title loan for in the first place!
1 800LoanMart does not look kindly on companies that offer interest only loans with large balloon payments attached because they give a bad name to the car title loans industry. The terms and conditions of a title loan from 1 800LoanMart are clearly stated at the time of signing, and all aspects of the payback amounts and the payback terms are gone over in great detail with the borrower. Sure the monthly payments in an amortized loan will be a bit more than the “low monthly payments” of an interest only loan, but unless the customer has the principal amount stockpiled away to afford the inflated balloon payment, those amortized loan payments each month will seem like a walk in the park compared to the headaches and hassles that accompany the mess left over after a balloon payment that goes unpaid—not to mention getting your car taken from you!
Hopefully this clears the air a bit on what separates 1 800LoanMart from other title loans vendors in California. No one should have a huge payment lingering over their heads when a little extra each month to a payment can prevent the threat of a balloon payment. 1 800LoanMart recognizes that while their monthly payments may seem more expensive than the monthly payment of an interest only loan, the borrower will benefit in the long run from an amortized loan because they won't have to worry about coming up with the entire principal loan amount at the end of the loan term.
To apply for a car title loan with 1 800LoanMart and see how much you will be able to borrow, visit http://www.800loanmart.com and fill out their free online application. It just takes a few minutes, and a loan agent will contact you to thoroughly provide all of the details and terms of your car title loan so that you get all the facts before signing any agreements.
# # #
Car title loans offered in several states. Title loans on clean car titles. Consumer bad credit loans available. Pink slip loans, auto pawns, and title loans available in California, Arizona, New Mexico, and Illinois.