You need money fast, and you are not sure where to turn. You know the bank will turn you down, so that’s not an option. You do some research and see that a getting a title loan could be the answer.
Let’s take a closer look at what a title loan is and whom it benefits. Then, you’ll know if a title loan is the right option for you.
How Does a Title Loan Work?
The idea of a title loan might seem confusing, but it’s really simple. Your car title is used as collateral to secure a loan.
The lender will appraise your vehicle and make you an offer. Most lenders provide around 50 percent of the vehicle’s value, although some offer more. Depending on the value of your vehicle, you might get as little as $300 or as much as $10,000.
The lender retains the title while the loan is active, but you get to keep your vehicle. Single-payment loans are typically active for a month. Installment loans typically last three to six months, with the borrower making monthly payments.
These loans benefit people who:
- Have bad credit.
- Need quick cash.
- Want to save on interest.
- Need a short-term loan.
Let’s take a closer look at who benefits from these loans.
People with Bad Credit
If you try to get an unsecured loan from a bank, the loan officer will check your credit. Unless your credit is perfect, that’s a scary thought.
Most banks require a credit score in the 700s before they’ll even consider lending you money. Some will let you slide by with a score in the mid to high-600s, but don’t count on it.
You don’t need good credit to get a title loan, though. Since your vehicle is used as collateral, your score can be awful and you can still get the loan. In fact, most title loan lenders don’t even check credit.
That makes title loans the perfect option for people who need quick cash but have bad credit.
Those Who Need Cash Fast
Sometimes, life happens, and you need money fast. Maybe you have a doctor’s bill that needs to be paid before surgery, or your child needs equipment to play on the baseball team. You also might need to make a home repair quickly, or maybe you need groceries to get through the month.
Title loans provide quick cash to borrowers. In fact, you can usually get approved in as little as 10 minutes. Just have your car appraised, fill out a little paperwork, and walk out with the money.
People Who Want to Save on Interest
Payday loans used to be the go-to option for people with bad credit. Now, however, borrowers are realizing title loans are more affordable. The interest rates tend to be lower than that of payday loans. That’s because these loans are secured. The lender isn’t assuming the same risk, so it makes sense to offer lower interest rates.
Lower interest rates mean you’ll pay less over the course of the loan. That can translate into saving hundreds of dollars. If you’re already tight on cash, that’s a huge benefit.
People Who Need Short-Term Loans
Title loans are short-term cash advances. They are a good choice for people who need to borrow money for as little as a month or as long as six months. If you think your financial situation will change in a short period of time, a title loan can help you make it through until your circumstances improve.
Is a Title Loan Right for You?
As you can see, lots of people benefit from title loans. Countless people receive money for their titles each day and use that money to handle their expenses. If you need some money to get you through the next month or so, consider applying for one of these loans.