What Are Title Loans and How Do They Work?
If you've been searching around for a way to get quick cash, an auto title loan may be the best option for you. But, before you decide for sure whether this is the decision you'd like to make, you should find out everything there is to know about title loans.
There are many pros to taking out a title loan, but there can be cons as well if you are not careful who you borrow from. In this article, we'll tell you everything you should know about title loans before you make your decision.
Your Car Is Collateral for Your Title Loan
You may be wondering, "Why is it called a 'title' loan?" Well, the word "title" means that your car is the collateral for this type of loan.
The title of your car basically states that you own it outright, and that it's paid off. You'll give the title to the lender until the loan is paid off in full.
If the loan doesn't get paid off, the lender then keeps the title for your car, therefore keeping your car. As long as you make your payments and they are on time, this will not be an issue for you.
The lender does not keep the car physically while you're paying off your title loan.
You still get to keep your car and drive it, as long as you are making the payments on your loan.
Typically, when first going to a lender’s office, they will first ask for proof that the car is, in fact, yours. They make ask for a set of keys in order to prove ownership. Next, they will want to see the car.
By looking at your car for make/model/year and condition, they will decide how much it is worth. Typically, the lenders offer anywhere between 25-50% of what the actual car is worth, given its condition as well.
You May Qualify for Title Loans, Even with a Low Credit Score
You may know that trying to take out a loan is almost impossible if you do not have a decent credit score. If your credit score is too low or inconsistent, you'll most likely be denied for any type of loan.
The best part of a title loan is, since it's a secured loan, your lender isn't worried about your credit score. That does mean that if you don't repay your loan, they repossessed you car to get their money back, but you can keep driving your car as long as you continue to make regular payments.
If your credit score is on the low side, this could be the perfect type of loan for you.
Look for Title Loans Near Me
If title loans sound like the direction you'd like to go, the next step is to find the lender.
First, you can do a quick google search for “title loans near me.” This will show you places in your area that offer them. Be sure to do your research before making a final decision as to where you will be taking out your loan.
Make sure to look up customer reviews and you can even search the business on the Better Business Bureau.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.