At some point in your life, you’ll probably find yourself in need of a loan. Sometimes you need some extra cash for a business startup, and sometimes you’ll just find yourself in a rough patch and need something to pay the bills. If your paycheck is running a few days late, and you don’t have anything in your savings account, sometimes an online title loan is the only way to keep the lights on.
In the old days, you would have to go to a bank or a wealthy community member and ask for their temporary charity. It was usually a tedious, and somewhat embarrassing process that would let the entire community know that you were running low on money.
Lenders saw this as an opportunity to capitalize. If they could provide a quick, easy, and confidential way of obtaining a short-term loan, then they could make some serious profits. They needed a form of collateral though. They decided the best idea was to hold the borrower’s paycheck or their car title. Thus payday and title loan services were born.
The Rise of Online Title Loans
In the past few years, these services have been able to expand their reach and offer borrowers increased privacy and ease of access by taking their business online. Sites like titlelo.com, one of many websites offering online title loans, make the process simple. Borrowers can go to their website, talk with an agent, provide the necessary documents and receive a direct deposit into their bank account.
What Are The Benefits and Risks Of Online Loans?
Taking out a title loan online, while not always the most secure, is the quickest way to get your money. Let’s take a brief look at some of the benefits and risks of using an online lender.
If you live in a rural area, you may not have a lender in your town, and you may have to drive up to an hour away just to get to an office, or to make your payments. By using an online title lender, you don’t have to worry about all of this. You can apply from the comfort of your own home, fax or email your documents digitally, and receive approval within hours.
Online lenders, like Car Cash, allow you to make all of your weekly or monthly payments online. This means that you won’t have to make that long drive time after time while you are in the process of paying off your loan, saving you hours of time and gas money.
One of the other main benefits is privacy. For many people, applying for a loan can be an embarrassing process. They have to meet with a person face-to-face and ask for money. For some, this can be mortifying. Additionally, if their neighbors are driving around town and see their vehicle parked outside of a loan office, then they might start forming their own judgments.
While you still have to provide your personal details to an online lender, the process is still more private. All of the details are handled through a phone call or a series of emails. In most cases, you will never have to physically meet somebody, and you won’t have to worry about the neighbors being nosy. For some people, this can be a lifesaver.
However, it’s important to remember that you are dealing with the internet. For as many reputable and honest lenders that are out there, there are also scores of fake lenders who will scam your money.
Usually, Google and law enforcement agencies will crack down on these organizations quickly. However, they can’t catch everybody at once. Before you give your details to any online lender, you should spend a little bit of time researching their credibility to ensure that you’re not about to have your bank account drained by some hacker in another country.
Besides worrying about the lenders themselves, you also need to make sure that your computer is secure. Since you’ll be uploading personal items such as your car information, address, social security, and even your bank account information online, this opens up the window for hackers to do their dirty work.
If you have any residual trojan or phishing viruses lurking on your device, then you could be handing them access to a gold mine. These viruses will immediately take a snapshot of this information and send it back to the people responsible for infecting your computer in the first place. With all of your bank account details and personal information, they could easily steal your identity or take money from your bank.
To cut down on the risk of any of these things happening, it’s a good idea to run a comprehensive virus scan on your computer before uploading any personal information. Most virus scans will be able to detect whether your system has become compromised and will destroy the malware in a matter of seconds.
How Do Payday Loans Work?
Payday loans are based on how much you make on your paycheck. These are usually small loans that are less than a few thousand dollars and are mostly used if people need to pay their rent or their bills in a tight spot.
Basically, you bring your a few weeks worth of pay stubs to the loan office or submit them online. This will give the lenders a way of seeing how much money you make, and how much they should give you. With this information, they can be sure that they aren’t loaning somebody more than they can reasonably pay back. After talking with a loan officer, you’ll usually be approved within hours. They’ll either cut you a check or direct deposit the amount into your bank account.
However, before they give you your money, they will give you a set interest rate and will set your payment dates up in accordance with your pay schedule. As soon as you get paid, you are expected to take a portion of your check and pay the lender back. In some cases, they will even take your bank account information and withdraw the money after you deposit your paycheck.
How Do Title Loans Work?
Title loans operate under the same principle, except instead of basing your loan off your weekly income, they’ll base it on the value of your car. When you apply for a title loan, the lender will appraise your car and assign it a value. You are then allowed to take out a loan that is less than or equal to that value.
Title loans can give borrowers a little bit more flexibility and allow them to take out a larger loan than a payday loan, especially if they have a newer model vehicle. For collateral, the lender will require you to temporarily sign over your vehicle’s title to them. If you fail to pay them back, they are legally permitted to take your car and resell it to get their money back.
In the case of an online title loan, you’ll be expected to fax or email them a copy of your vehicle’s title and send them pictures of your vehicle for appraisal purposes. Once you are approved, they will deposit the money directly into your bank account.
The Rise of Title Loan Spam
It’s easy to see why these quick, short-term loans can be appealing to so many people. Online payday and title loans offer a whole host of extra benefits as well. Many online lenders also have affiliate programs which offer commissions to webmasters who link borrowers to their site.
While this provides a way for webmasters to make money and can bring in more customers for the lender, it, unfortunately, has resulted in a lot of spam. In some cases, one particularly large lender will create multiple websites all listed as different companies to give borrowers the illusion of competition. While not illegal, this is dishonest and gives people an inaccurate view of their options.
When online payday loans first rose in popularity, the spam was so bad that Google had to manually review the first ten listings to make sure that they weren’t duplicates or owned by the same company. When Google has to manually review results like this instead of using their traditional web crawling algorithm, you know there’s a problem.
Unfortunately, as soon as Google was able to crack down on online payday loans, online title loans started following suit, and now they are using Yelp and other online review sites as well.
If you search Yelp for title loans in South Florida, 60% – 70% of the “different” listings all led back to one online lender. A man named Martin Contreras who lived halfway across the country in Idaho was responsible. While he’s since had many of his fake listings removed, his marketing team continue to churn out new shill businesses like Indigo Lending, Deluca, Weinstein Title Loans, and hundreds more. With the amount of fake listing being created, it makes me wonder if Yelp or one of its employees is conspiring with Martin.
Why Is It Happening?
There are quite a few reasons for the spam. The first is affiliate commissions. Third party websites can gain massive revenue when they recommend a lender to somebody and make a conversion. Because of this incentive, webmasters will often set up multiple websites under different names, all recommending the highest paying lender.
As we discussed above, the second cause of spam is the lenders themselves. Many lenders will set up multiple online businesses under different names (don’t confuse this with a legitimate branding strategy like TMX’s TitleMax, TitleBucks, and InstaLoan) and give fake physical addresses. This is a grey area in the law book, and while frowned upon, it isn’t exactly illegal. If one business creates multiple listings and markets them all well, then they can dominate the market.
How Does This Affect Borrowers?
All of this spam and false advertising is extremely misleading for borrowers seeking a loan. Not only are they not getting an accurate view of the market, but they’re being directly lied to. When it gets to the point where borrowers can’t trust whether a company really is who they say they are, it’s bad.
If they can’t trust who the lender is, then why should they be expected to give them their information? This gap in trust prevents the honest loan companies who stick to one listing from being able to compete. It also tears down their reputation.
When there is such widespread spam and dishonesty, the small, local companies who borrowers are really looking for aren’t able to stay in business. This, in turn, leaves very limited options to the borrowers. Sometimes their only choice is to use an online title loan company that they can’t fully trust.
Lack of Security
Online title loan spam also has a huge effect on security. If one large lender is managing ten different listings, then there’s no way that they can keep up with their security the way that they should be.
As we talked about at the beginning of the article, online lending opens up a world of opportunity for hackers to steal borrowers’ private information. When you have to submit your title information, address, identification, and even bank account details online, you want to make sure that the site you’re submitting them to has top-of-the-line security and can keep everything confidential.
It’s almost impossible for one man to ensure that all of his listings are properly secured. These listings are prime targets for hackers who can easily infiltrate them and access all of the detail they could ever want about the borrowers.
What Can Be Done To Stop Title Loan Spam?
Online title loan spam has reached the same level that online payday loan spam did a few years ago. It has become a problem that can no longer be ignored. All of this excessive spam is making the honest lenders suffer and lose business, and it’s causing borrowers to lose all of their trust in the market.
To stop this, search engines need to crack down on fake listings. To list an online title loan service, lenders should be made to go through an enhanced verification process that prevents duplicate business listings. They should also carefully screen affiliate sites and eliminate reviews that are obviously biased, misleading, or fake.
Spam can never be eliminated, as there will always be somebody who knows how to get around the system. However, if these methods were implemented by crowdsourced review sites such as Yelp, and major search engines like Google, Yahoo, and Bing, then there would be a huge decrease in the amount of spam.
It’s the search engines duty to their users to crack down on the fake, duplicate, and misleading content. Reducing the excessive title loan spam is the only way to restore borrowers’ faith in lending companies, and allow the small local businesses to compete.
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