When people need money urgently, they often turn to payday loans. However, a payday loan might not be the best solution if your financial crisis isn’t a one-off event. Instead, it would be best if you considered getting a title loan.
But what is a title loan? Why should you take out a title loan when you have a poor credit score? How does a title loan work?
We’ve got everything you need to know below.
Introduction to Title Loans
Using the vehicle’s title as collateral, the borrower can obtain a car title loan at the lender’s discretion, depending on its appraisal rate. The loan amount is usually calculated as a percentage of the vehicle’s equity or value.
With an installment loan, the borrower must repay the loan in fixed monthly payments over an agreed-upon period. With a single-payment title loan, the entire loan must be repaid in one lump sum at the end of the loan period.
Title Loan Benefits & Advantages
The primary benefit of title loans is convenience; borrowers can receive funds quickly without undergoing a lengthy credit check. Title loans enable borrowers to retain possession of their vehicle while making payments.
The borrower is only required to return the loan amount plus interest, and as long as the loan is paid in full on the agreed-upon due date, they can keep their car. Borrowers also benefit from the immediate release of funds following the approval of their loan application.
What Is Needed to Qualify
To qualify for car title loans, a borrower must be the vehicle owner with a clear title in their name, present proof of income, provide proof of residency, and give proof of valid vehicle registration. Proof of insurance may also be required, depending on the specific lender.
The borrower will grant the lender the right to put a lien on the vehicle in exchange for the title loan. Repayment terms and loan duration can vary from lender to lender, and some lenders may require the borrower to make interest-only payments throughout the loan’s term.
Exploring the Process of Securing a Title Loan
The process of securing a title loan is quite simple. You must bring your vehicle, driver’s license, proof of insurance, and proof of residence to the title loan provider. They will appraise your vehicle to determine the loan amount available to you.
They will also complete a credit check; you must complete a loan application. The speed with which you will receive the loan will depend on the paperwork you provide and the company’s internal procedures. Once approved, you will receive your loan in cash.
Alternatives to Obtaining a Title Loan
Alternatives to obtaining a title loan include auto refinancing, getting credit from a credit union or bank, and using an emergency fund. Another option is Buy Out Title Loans. A buyout title loan is when a lender pays off an existing title loan and provides new financing with the same loan documents.
Consider Applying for a Title Loan Today
A title loan is an easy and quick way to receive needed cash when an emergency arises. The amount received is typically based on the value of your vehicle, and the repayment period is usually short-term.
You can access your cash quickly and affordably with no credit check required. If you need money now, consider applying for a title loan today.
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