A title loan is a short-term loan where you borrow money against the value of your car. You can get a title loan for up to $10,000, and most lenders will give you a month to pay it back. Title loans don’t hurt your credit score, and you don’t need to have good credit to qualify.
If you’re in a financial bind and need money quickly, a title loan could be the perfect solution. Title loans are much easier to qualify for than traditional loans, and you can get the cash you need in as little as 24 hours. In this post, we’ll take a look at what a title loan is, how it works, and why it’s such a popular option for those in need of quick cash.
What Are Title Loans, And How Do They Work?
A title loan is a personal loan, usually secured by a vehicle, that doesn’t require a credit check. That’s because the loan is secured by your vehicle’s title, which the lender holds until you repay the loan.
If you can’t repay the loan, the lender can repossess your car. That’s why it’s important to only borrow what you can afford to repay, so you don’t risk losing your car.
To get a title loan, you’ll need to bring your vehicle to a title loan lender and fill out an application. The lender will then appraise your vehicle and give you a loan based on its value. A title loan lender will usually let you borrow 25% to 50% of the vehicle’s worth.
Title loans also do not look at credit scores which is why people in debt will usually opt-in for this type of loan if necessary. Most title loans are for 30 days, but some lenders may give you up to a year to repay the loan.
The interest rates on title loans are high, ranging from 30% to 60% APR. That’s because they’re short-term loans and they’re considered high-risk. However, if you are in a bind and need cash fast, a title loan may be the perfect option for you.
How Can A Title Loan Help In An Emergency?
A title loan can help you in a number of ways. If you’re facing eviction or foreclosure, a title loan can help you catch up on your rent or mortgage payments. If you need to pay for car repairs, a title loan can help you get the money you need quickly. Title loans are also helpful if you need to pay for medical bills or other emergency expenses. Most title loans are accepted within 30 minutes which allows this option to be a great solution if you need cash fast.
Where To Get A Title Loan?
You can get a title loan from a number of sources. There are many title loan companies that operate online and in-person.
When you’re looking for a title loan, it’s important to shop around and compare rates. Title loan interest rates can vary widely, so it’s important to find the best deal possible. You can use a website like LoanMart to compare title loan rates and find the best deal for you.
When you’re looking for a title loan, be sure to only work with a reputable lender. There are many scammers out there who will try to take advantage of you. Be sure to read reviews and check with the Better Business Bureau before you work with a lender. Some of our favorite lenders that offer title loans are Max Cash and Title Max.
What Are The Benefits Of Using A Title Loan Instead Of Other Borrowing Options?
There are many alternatives to title loans like short-term bank loans, hard money loans, credit card cash advances, payday loans, personal loans, and help from family or friends.
The best part about online title loans is how easy it is to get, how fast it is to get, and it requires very little of your income history. However, why is this a better option than the other alternatives?
Title Loan vs Short-Term Loan
You may be wondering how a title loan is more beneficial than a short-term bank loan. You can usually qualify for a short-term bank loan within an hour, so it definitely is quick. However, the problem is you have to pay back most short-term loans within a week. A title loan isn’t long-term borrowing, but lenders will usually give you 30 days to pay them back.
Title Loan vs Credit Card Advance
Another borrowing option would be trying to get a credit card advance. A credit card advance is when you take out cash from your credit card.
The interest rate is usually lower than a title loan, but the fees are generally higher. In addition, if you don’t have good credit, it may be hard to get an advance from your credit card company.
When applying for a credit card advance, your lender will need to see your income and credit history. Also, if you don’t pay back your credit card advance during your agreed-upon terms this can hurt your credit score. Since a title loan doesn’t impact your credit score, it is a much safer option if you think there may be a chance where you default.
Title Loan vs Installment Loan
An installment loan is another option that may be available to you. An installment loan is a loan that is paid back over time in a set number of payments. The payments are usually monthly, but some lenders will allow weekly or bi-weekly payments.
The interest rate on an installment loan is usually lower than the interest rate on a title loan. However, the fees associated with an installment loan are generally higher. In addition, if you don’t have good credit, it may be hard to get an installment loan from a bank or other lender.
Title Loan vs Payday Loan
Payday loans are similar to title loans but have a shorter payback time than title loans. Payday loans also usually have higher interest rates than title loans.
If not paid back in two weeks, it may be escalated to a collection agency, damaging your credit. For most online payday loan options, they may be pitched as a quick and easy solution, but they can be dangerous if not fully understood.
Title Loan vs Personal Loan
Personal loans have a much longer payback time of 24-60 months. With the extended duration of these loans, you can make monthly payments towards your total borrowed amount until you pay off the loan.
However, personal loans require a longer application process, and you will need good credit to qualify for a personal loan. The minimum credit score for people who qualify for personal loans is usually 610. So if your credit score isn’t that high, a title loan would be the superior option.
Title Loan vs Family and Friends
Family and friends are always an option when you need money, but this option is often seen as the last result. Oftentimes people are uncomfortable asking for money from their loved ones.
Another issue that could arise is if you’re unable to pay back the money you borrowed in a timely manner, which could damage your relationship. By using a title loan company, you can avoid all of these potential problems.
How To Apply For A Title Loan
When applying for a title loan, you must have the following:
- Vehicle title and registration
- Any financial documents related to the vehicle
- Driver’s license
- Proof of insurance
- Proof of residency like a utility bill
- Proof of income like recent pay stubs
- Contact information for at least two references
A title loan is meant to have access to your car in case of need of possession. This is why they will need all the proper documents for the vehicle. The lender will then hold onto the title until the loan is paid off in full.
Most lenders have online car title loan applications, which makes the process quick and easy. All you need to do is fill out the application with your personal information, vehicle information, and employment information.
Once you submit the application, a loan representative will contact you to discuss your options and finalize the loan. After that, all you need to do is sign the loan documents and receive your cash.
FAQs About Title Loans
- What is the difference between a title loan and a payday loan: A title loan is a longer-term loan that is secured by your vehicle. A payday loan is a shorter-term, unsecured loan.
- How long does it take to get a title loan: It usually takes less than 24 hours to get a title loan.
- What is the interest rate for a title loan: The interest rate for a title loan is typically higher than a traditional loan but lower than a payday loan. However, the faster you pay your loan the lower your interest will be.
- What are the terms of a title loan: The loan term of a title loan vary by lender, but most lenders will give you 30 days to pay back the loan.
- Can I get a title loan if I have bad credit: Yes, you can get a title loan with bad credit.
- What is the maximum loan amount I can borrow with a title loan: The maximum amount you can borrow with a title loan depends on the value of your vehicle.
Now that you understand what a title loan is, and why it’s so important, you can decide if it’s the right option for you. The application process is quick and easy, and you can get your cash in just a few hours. Be sure to shop around for the best interest rates and terms before you apply.