At least 2 million Americans use their cars to get title loans.
There comes a time when you instantly need urgent cash. Maybe you need to settle a medical emergency, pay an overdue bill, or even repair some accident damages. Whatever the reason is, your wish during that time is to get quick money.
The situation can worsen if you just lost your job. That’s when car title loans come in handy.
A car title loan is any short-term loan you get by using your car as collateral. If your vehicle is in excellent condition, the lenders ask for your car keys, licenses, log books, and other documents that show the car is yours.
Should you fail to pay, the lender owns the car. While car title loans have their cons, they come with many benefits that make them popular. Here are a few of the many benefits of vehicle title loans.
1. Quick Cash
A car title loan is the best option if you need urgent money. The lenders do not issue a long list of requirements like with traditional loans. They only need to know the type of your car, its current market value, condition, and so on.
On average, you can get your money within two or three working days.
So, how do title loans work, and what does the lender consider? The vehicle is the only consideration. If you have a car, the lender will need all the documents showing that the vehicle is yours. The documents must be valid.
Also, the lender will determine the current value of your car. Assuming that your vehicle is worth $2500, the lender may decide to offer a worth loan half of that amount, which is $1250.
The quick application and reimbursement processes allow the borrowers to settle their emergencies within the shortest period.
2. The Credit History Does Not Matter
Poor credit history is one of the leading reasons why many people don't qualify for traditional bank loans. That's not the case with auto title loans, as you can secure a loan even with bad credit.
As mentioned, the lender only focuses on the value and condition of your car. If your vehicle is in excellent condition, then you will get a loan.
You can even get a higher amount than your car’s value if you have a consistent income flow. All you need to do is provide evidence of your income source to get a higher loan amount.
3. You Continue to Use the Car
A common misconception is that the lender gets your car immediately when you get the money. That's not true! You can continue using your vehicle for as long you wish, provided that you adhere to the lender's terms.
The lender only uses the title of the car as the security for the loan. They only keep a copy of the car's documents and the logbook, not the original ones. Plus, they only take the car when you fail to pay as per the agreement.
However, some lenders may require you to leave your car on their premises because of other reasons. Always confirm with your lender regarding the possession of the car. The lender should clear any confusion on the car usage.
4. They Are Cheaper Than Cash Advances
Auto title loans may not have the cheapest lending terms. However, they are better when compared to other loan types, such as merchant cash advances.
The collateral, which is the car, adds a security layer, hence the reduced interest rates. Nevertheless, the rate varies from one lender to the other, and this means that you should always confirm the rate before getting the loan.
5. Reduces Financial Stress
Life can get hard when you lack enough money in the time of need. Thanks to car title loans, vehicle owners can be relieved of their stress.
The loan can relieve the stress of borrowing from your family, relatives, and friends. You can also reduce the tedious process of applying for the conventional banks' personal loans.
And even when you fail to pay, you can tell the lender to sell the car to repay themselves. You will not have to hustle looking for money to repay the loan. With time, you can decide to buy another car or make another investment if a vehicle is no longer a viable option for you.
6. Flexible Repayment Terms
Most car title loan lenders offer flexible terms of payment based on the amount and other factors. For instance, you can ask for a repayment extension if you can't get the money you need within the determined period.
Also, you can make an early payment without being charged the prepayment penalty. This repayment flexibility makes auto car loans one of the best financial options out there.
7. Freedom of Use
There is no limitation to what you can do with your money once you get the loan. You can invest in a business, settle an existing loan, or even use it for other personal needs.
This freedom is a great advantage, considering that you can't qualify for some loans without outlining the loan purpose. Nevertheless, it's advisable to use the cash wisely to avoid repayment difficulties.
8. Many Vehicles Can Qualify
Lenders accept all types of automobiles, provided that they are in excellent condition. You can use your SUV, your truck, motorbike, or any vehicle.
Also, the lenders do not consider the newer or expensive cars only. People with old cars can still qualify, although for a significantly lower amount. The wide array of options makes it possible for different borrowers to qualify.
9. Builds Your Credit Score
A car title loan can help you build your credit score. When you pay in time, the lender sends the report to the credit bureau. Thus, your credit score increases automatically. A high credit rating makes it easier for you to qualify for other types of loans in the future.
Many Lenders Offer Car Title Loans
You can now look for a lender if the above information has caught your attention. Many lenders offer car title loans in the United States.
Compare their rates and terms of lending to choose the most affordable and reasonable one. Make sure that you repay the title loan in time to boost your credit rating.
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