Car title loans are financial bailouts that people can capitalize on in their times of need. These loans are particularly useful for people who need cash quickly to pay bills, cope with emergencies or manage their debt. Should you own a vehicle outright or owe little money on the vehicle, you can score a car title loan, also known as a fast auto loan or collateral loan.
How Does a Car Title Loan Work?
A car title loan is a short-term secured loan that allows borrowers to use their vehicles as collateral. These loans don’t come with as many requirements as conventional loans. When approving the car title loan, lenders typically don’t do credit checks or look into one’s credit history.
As long as the vehicle is lien-free, you can apply for a loan. During the application process, applicants must show lenders proof of ownership of their cars and a valid driver’s license. Once approved, the lender will register a lien against the car throughout the loan term, then remove the lien once the loan is repaid in full.
A car title loan is considered a more cost-effective alternative to a cash advance, which usually comes with a high-interest rate and greater risk as it’s unsecured. Car title loans give borrowers additional layers of protection because of the collateral involved.
Furthermore, the repayment options for a car title loan are convenient. Lenders usually offer timely repayment options and schedules that appeal to borrowers. Borrowers can make online payments through their title loan account, use a wire transfer, issue a money order or set up preauthorized payments that withdraw from their account once it’s time to pay the loan. The loan length usually relies on how much money the borrower can afford to pay monthly.
How Does a Car Title Loan Benefit Borrowers?
The flexibility a car title loan provides borrowers makes it appealing when they need fast cash. You might need a car title loan if you’re not working. While you need a monthly income to qualify for a car title loan, you do not need to be in a job per se. The income source can be from anything, including your Supplemental Security Income (SSI) or disability income. As long as you show you can repay the loan, there’s a good chance you will qualify for one.
Another benefit of using a car title loan is that you still get to use your car while you’re paying off the loan. It’s a common misconception that you don’t get to use the vehicle during the loan term. The only thing a borrower has to worry about with their car is the lien placed on it to secure the loan, allowing the lender to bypass investigations and credit checks that conventional lenders usually do.
Because the money is quickly released, you may find it beneficial if you’re facing a significant amount of debt that you need to pay off. On the day that you apply for the loan, you receive the money from the lender. The money allows you to address your debts in the soonest possible time while you still get full use of your car. As long as you have some form of income coming in, whether from a business that you run or a form of insurance, then you can use the money to cover your expenses and pay back the money as soon as you can. Lenders are usually lenient with their loan terms.
Additionally, suppose you have an emergency, like something medical-related, a family emergency, or face unforeseen circumstances. In that case, the car title loan keeps you the kind of immediate financial support that helps them address the situation. Lenders who grant car title loans won’t pressure you as long as you can pay back the loan.
If car title loan applicants are 18 years or older, can provide proof of residency, and have updated insurance on the vehicle, they can qualify for the loan. Applicants should ask about key aspects of the loan, including the annual percentage rate and any fees that accompany the loan. Applicants can apply for car title loans from any remote location and determine if they have been pre-approved for the loans. Lenders will get your information, review it in a few minutes, then provide you with feedback to let you know if you’re eligible for the car title loan.
If you’re in a serious financial situation and need fast funding, a car title loan is one of the most viable alternatives to turn to when debts have to be paid off earnestly.