Many of us now have such bad credit that we believe that there are no more options out there for us to get any kind of finance. In reality, however, there is one more option. You could look into car title loans, which are there to help you get out of a financial tough spot, and very quickly as well.
What Is a Car Title Loan and How Does it Work?
The easiest and quickest way to get a car title loan is if you own your vehicle outright and it is free of finance or other liens. In fact, many lenders have this as an absolute requirement. You essentially sign over the title deed of your vehicle to your lender, and they give you money in return.
Once upon a time, you would have to physically take your title deed and spare key into a lender’s office. Now, however, the world is completely online and you can apply for title loans through the internet as well. You can even access mobile apps that allow you to not just apply for a title loan, but find out what your car is worth as well.
Car title loans do have high interest rates, but that is because they are short term loans. When lenders look at your application, they will not take any notice if your credit score, instead focusing solely on the value of your vehicle. Sometimes, they will also check whether or not you have insurance in place. The amount that they will provide you with depends on a number of factors, including:
- The value of your vehicle.
- How much money you want.
- How you intend to pay the loan back.
The Difference Between Pawn Loans and Car Title Loans
A pawn loan is different because you actually have to surrender the object that you want to pawn. So, if you pawn your car, you won’t have possession and use of it anymore until you pay your pawn loan back. With a title loan, however, you can continue to use the vehicle.
Missed or Late Payments
If you can’t make the payments on your loan, the lender is within their rights to come and take your car. After all, you signed the title deed over to them. Most lenders will allow you to roll the loan over, meaning you can wait an extra month. However, you will still have to make the interest payment, and you will obviously also incur more interest over the extra time period, making this an extremely expensive loan construction.
Car title loans, as you can see, have their pros and cons. If, however, you have a real financial emergency and you need money today, regardless of your personal financial status, then car title loans are fright for you. Do make sure, however, that you perform some research into the different lenders so that you find one that is most suited to your needs.