When desperate for cash, many consumers turn to car title loans. While these loans can provide you with the money you need, they’re not always the best option. One of the major pitfalls of getting a title loan is the interest rate.
It’s true that many lenders have lowered interest rates, but the amount of interest you’ll have to pay on a title loan is still significantly more than what you would pay on a traditional loan.
Understanding Car Title Loans
When you use the equity that you have in your vehicle to get a loan, it’s called a title loan. What you’re doing is borrowing money from a lender and using your vehicle’s title as collateral. If you don’t pay back the loan according to the loan agreement, the lender can take your vehicle and sell it at auction.
Unlike a traditional loan, which is primarily based on your credit score, a title loan is based on the value of your vehicle. One of the benefits of title loans is that you get to continue using your vehicle while you work to repay the loan.
How the Process Works
If you own a motorcycle or vehicle, you can get a title loan. Today’s lenders make the lending process very easy. You’ll find that many lenders allow you to complete almost all of the paperwork online. To get the loan, you’ll need a lien-free title and vehicle.
Before you can get approved for the loan, you’ll need to have your vehicle inspected and appraised by the lender. After some simple paperwork, you can get the loan money you’ve been approved for.
Can I Get A Title Loan With Bad Credit?
When you consider the fact that millions of Americans have poor credit, this is a very common question. Applicants want to know if they can still get a loan with bad credit.
The short answer to this question is yes. The reason why it’s possible is because title loan lenders don’t use your credit rating as a way to exclude you from being eligible for the loan. Lenders accept applicants with any type of credit rating because they don’t provide unsecured loans.
Title loans are what financial institutions would consider secured loans, which means they’re loans that are secured with a form of collateral. The collateral that is used to get the loan is the property title for your vehicle.
As long as you have a title and meet all other eligibility requirements, you should be able to get approved with no credit at all. Although it can be an excellent way to get quick money in a desperate situation, title loans aren’t for everyone, and they can be expensive to repay.