A title loan could be a helpful financial tool for anyone that has found themselves in a strained financial situation, or simply in need of fast cash. As a loan with surprising flexibility with approval and terms, it can be especially appealing for those from all financial backgrounds. As a borrower, youвЂ™ll want to be informed of the ins and outs of a title loan before you make your decision to make sure this financial tool is right for you!
You might be wondering what they are or how they work. Some of the most frequently asked questions that potential borrowers have about title loans are:
What is a Title Loan?
A title loan is simply a financial resource to utilize when you have equity in your car. Title loans may let you borrow off your carвЂ™s current equity and use the title as collateral for the loan. Since your title will beВ the collateral for the loan, the loan is then secured. Typically, a title loan will allow you interest rate payday loans Delta Ohio to borrow 5% to 50% of the equity in the car. Depending on the equity, you might get anywhere from $1,000-$10,000.
How Does a Car Title Loan Work?
A car title loan, otherwise known as a pink slip loan or an auto equity loan, works in a simple way. They are typically short-term loans and can be an easy way to get an influx of cash in a hurry. If youвЂ™re in a tough financial situation and you need cash for a big purchase or an unexpected bill, a title loan can be the perfect resource for it. To obtain a title loan, a borrower will simply need to place an inquiry, and if approved, use their title as collateral for the loan.В During this process, a few different things will happen to your title. A lien will be placed on it for the duration of the loan, which makes your lender the lienholder. However, as soon as the loan is paid in full, the lien is removed, and your title is clear! It is a simple, quick solution if you are strapped on cash.
Can I Get a Title Loan with Bad Credit?
Car title loans are a popular type of alternative loan among those with fair or poor credit, as a borrowerвЂ™s credit history is not the determining factor for approval. Those from every financial background can potentially receive approval for an auto equity loan. Whether your credit is stellar or poor, getting a title loan can still be an option for you! 1 В Instead of just your credit, title loan approval is more focused on:
- The BorrowerвЂ™s Ability to Repay the Loan
- The Equity of the Collateral Offered
If you are not as confident with your credit but you are still in need of funding, a title loan can be the financial tool that you need to get your cash. 1
What are the Benefits of an Auto Equity Loan?
Since a title loan is secured through a title, it can offer many benefits that a traditional loan may not. As a unique type of alternative loan, title loans offer these advantages for borrowers:
- Interest Rates: One of the biggest benefits of a title loan can be the competitive interest rates. This is one of the most important parts of your loan, as it will determine how much youвЂ™ll pay off in the long run. Secured loans generally offer more competitive interest rates, and title loans are secured loans through your collateral.