Car title loans can provide fast access to cash for borrowers who lack savings and aren’t eligible for traditional bank loans.1 In financial emergencies, this can make a title loan a useful financial tool for some. However, there are prevailing misconceptions about these secured installment loans. By understanding the facts rather than relying on mistaken beliefs, borrowers can see how ChoiceCash auto title loans can be a solution worth considering.
Here are common myths about title loans – debunked.
Debunking Common Myths About Title Loans
So that borrowers are properly informed, here are a few of the most stubborn untruths about auto title loans – and the facts:
Myth: Title Loans are Only for Borrowers with Good Credit
To the contrary, title loans may benefit customers who can’t borrow from traditional banks due to credit challenges.1 It’s possible to get a title loan with poor credit, minimal credit history, or past credit issues such as charge-offs or dismissed or discharged bankruptcies.1 Instead of focusing on your credit score and credit history, ChoiceCash is more interested in your ability to make loan payments.1
Myth: You Will Lose Your Car When You Take Out a Title Loan
The truth is that borrowers can keep their car and drive it as usual while they make loan payments and their account is in good standing. Continued access to the vehicle is a key ChoiceCash loan feature. Note that if you miss your loan payments, the lender could repossess your vehicle. Therefore, before taking out a loan, you should be confident in your ability to fit the loan payment in your budget, and making loan payments on time.
Myth: Title Loans Have Hidden Fees
ChoiceCash emphasizes transparency. Borrowers will never experience hidden fees or unexpected balloon payments. We take pride in providing clear and simple loan terms as well as excellent customer service and support. The title loan contract will disclose all applicable fees in detail, and loan officers are happy to answer any questions that borrowers have about title loan fees.
Myth: A Job Is Required In Order to Qualify for An Auto Title Loan
Since vehicle-secured loans are primarily based on the value of the car or truck and the applicant’s verifiable income, some potential borrowers may assume that being traditionally employed at a job is required in order to qualify for a loan. That’s however not the case with many title loan options! As long as an applicant has a verifiable and sustained source of income, getting approved for a car title loan is possible.1 Examples of acceptable income source include self-employment, retirement or pension income, income from rental properties or farm income!
Myth: Title Loans Are Hard to Get
When starting on a new loan application, applicants may automatically assume that they’re in for a long and difficult process. That can be true for some loan options, especially those provided by traditional lenders like banks and credit unions. Vehicle title loans however are designed with flexibility and ease of use in mind. For many applicants, they are comparatively easy to get and qualify for, and the process can be short and flexible.1
Understanding the Truth About Title Loans
What a Title Loan Really Is And How it Works
As the name implies, auto title loans are largely based on the borrower’s vehicle.1 The vehicle secures repayment of the loan, and the customer can use the loan proceeds for any personal or household need. For collateral, borrowers can use a fully or nearly paid-off car or truck.1 Upon funding, the lender puts a lien on the vehicle’s title but releases it once the customer pays the loan off.
To qualify for a ChoiceCash title loan, applicants must own a car or truck that’s registered in their name and provide proof of a steady income source. They must also be at least 18 years old and live in the state in which they’re applying.1
While ChoiceCash does review credit reports, its approval process focuses more on the borrower’s income and ability to make payments. In many cases, the application process can take less than an hour, and funds may be available as soon as the next business day. In some cases, they’re available even sooner.1
The amount customers can borrow depends primarily on their income and their vehicle’s value.1 With ChoiceCash, customers may qualify for up to 50% of their car’s equity. The amount they borrow is up to them, as long as it’s within their approved loan limit.
Borrowers have several options for receiving loan funds and making payments, with no bank account required.1
ChoiceCash offers competitive interest rates, which could decrease over time. This could lower the borrower’s monthly payments accordingly through the end of their loan term.2
Benefits of Title Loans Compared to Other Loan Types
Traditional bank loans generally have significantly lower interest rates and APRs than title loans do. However, they tend to rely heavily on credit scores and often take longer to process and fund. Car title loans on the other hand place more emphasis on the vehicle’s value and the borrower’s ability to make payments. This usually makes the title loan application process faster and more flexible.1
Compared to payday loans, car title loans oftentimes offer access to larger loan amounts, longer repayment terms, and typically lower interest rates.1
The Application Process for Title Loans
While each lender has its own policies and procedures, ChoiceCash keeps the application process convenient and easy. Here are the simple steps:
- Apply online or over the phone: Complete a brief online pre-qualification questionnaire or apply directly with a loan officer by calling 855-422-7402.
- Provide the required documentation: We keep paperwork to a minimum so that borrowers can quickly qualify and get the cash they need – fast.
- Sign the loan agreement and receive loan funds: Once we verify the documents and the borrower signs the contract, funds are typically available within one business day. Depending on approval timing, same-day funding is sometimes possible.1
The Short-Term Solution: How Title Loans Can Help
Situations Where Title Loans Can Provide Immediate Financial Relief
Upon final approval, title loan funds are usually disbursed quickly.1 As a result, borrowers tend to use title loans for financial obligations that require urgent attention. Typical uses for title loan funds include:
- An unexpected medical bill
- Urgent expenses such as rent or utilities
- Consolidating existing debts, especially debts that have a high interest rate
- Veterinary costs
- Funeral or legal fees
How Title Loans Can Fit into a Short-Term Financial Strategy
Car title loans can provide fast cash in urgent situations and can help customers meet short-term financial needs.1 However, it is recommended that borrowers don’t take out auto title loans for ongoing living expenses – if you consistently run out of funds before your next paycheck, it might be time to create a budget, thoroughly evaluate your expenses and adjust them as needed to bring them in line with your income.
It’s also not advisable to use title loan proceeds for non-essential expenditures such as vacations or entertainment.
Repayment Options and Flexibility with Title Loans
With ChoiceCash, you can choose how to repay your auto title loan. Borrowers can make payments via:
- Phone (bank account or card)
- Recurring payments (bank account or card)
- Participating money transfer locations
- MoneyGram
Exploring Title Loan Alternatives
Other Financing Options Available to Consumers
Consumers who have damaged or limited credit and lack relationships with traditional bank products may have alternatives to title loans. Depending on the applicant’s state of residence, options can include:
- Car pawns: The customer uses the vehicle’s title as collateral for a short-term pawn loan. As opposed to a title loan lender, a title pawn provider may require that the vehicle be placed in storage while the loan is outstanding.
- Car title lines of credit: These allow the borrower to repeatedly draw funds against their vehicle, which secures the line of credit.
- Payday loans: Payday lenders typically expect borrowers to pay their loan back by their next pay day.
Pros and Cons of Alternatives to Title Loan
Every loan option has benefits and drawbacks that you may want to consider:
- Car pawns: The loans offer quick access to cash, frequently without credit check. However, many lenders keep the borrower’s vehicle during the loan term, and loan payments normally do not build credit as title pawns are not typically reported to a credit bureau.
- Car title lines of credit: While we offer borrowing and repayment flexibility with qualification requirements similar to title loans, car title lines of credit can come with high fees and interest rates.
- Payday loans. Payday loans usually don’t require a credit check. However, the amount you can borrow is typically less than a title loan. You must usually repay the loan faster and at higher interest rates.
When to Consider Alternatives to Title Loans and Other Financing Options
Before applying for a title loan or another loan option, potential borrowers have several alternatives they can consider. Depending on their financial circumstances, they can include:
- Negotiate existing debts with creditors for payment plans or extensions
- Access urgent financial help from from family, friends, or non-profit organizations
- Use a credit card for a cash advance
- Consider selling personal valuables for needed cash
Conclusion
Now that you know the truth about auto loans and can separate myth from facts, you are well-equipped to decide if you want to consider one to get the emergency funds you need.1 Before you take out any loan, make sure you can manage your loan responsibly and make on-time payments.
If you decide that a title loan can be a good solution for your financial needs, start your application online today!