Pawn shops are a notable way to get cash for your valuable items when you’ve hit a tough financial situation. Many customers pawn jewelry, electrics, and other assets. Typically, the biggest asset a customer has is their vehicle! Some pawn shops can offer title pawn loans, which allow you to leave your vehicle title with the pawn shop temporarily while you pay off your loan.
So, what’s the difference between pawn shops and car title loans? While they may offer a similar service, the execution and benefits differ greatly.
How Do Pawn Shops and Car Title Loans Work?
There are two common loan options that will allow you to use your title to get cash:
- Title Pawn Loan
- Car Title Loan
Both options allow for a customer to use their vehicle’s title instead of their credit history to obtain the funds they need. Both pawn shops and car title loans are a type of unique secured funding that relies on collateral. For both options, a vehicle and its title will be the collateral for the loan. Secured funding can allow the approval process to be more flexible and open to borrowers from all different types of credit histories and financial backgrounds.
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Both a title pawn and a title loan can offer cash based on the value of the vehicle. The more equity a car has to borrow from and the greater an applicant’s income, the more potential there is for a higher funding amount. This type of collateral-based funding allows borrowers to take their vehicle’s available equity and turn it into emergency cash-without the need for perfect credit.
You can typically find car title loans online and in person. Title pawns can often be found at most pawn shops, although there some online lenders.
Can I Keep My Car When I Apply for Cash Through Pawn Shops and Car Title Loans?
The location of the vehicle during the repayment of the loan is one of the ways where these two loan options differ. Title pawn loans may let a borrower keep their vehicle during the repayment process, but not always. This part of the service depends on the shop or lender a customer chooses to borrow from.
With a title loan, however, a borrower can keep and drive their vehicle during the repayment process if they make consistent payments on their loan. Both the title loan provider and the title pawn lender will hold onto the borrower’s title until the loan has been paid in full.
What are the Disadvantages of Pawn Shops and Title Pawn Loans?
Besides the availability of a vehicle during the repayment process, there are other differences between pawn shops and car title loans. These differences can often be viewed by many as disadvantages that are not ideal for the average borrower.
Some of these disadvantages include:
- Length of the Loan: Typically, a title pawn loan offers a loan term that is 30 to 90 days. This can often not be enough time for a borrower to repay their loan. In contrast, loan options like ChoiceCash Title Loans can offer longer loan terms if needed. This can make the repayment process for title loan much more convenient.
- Interest Charges: On top of a short repayment period, title pawn loans often offer high interest rates that are tough to repay. While interest is the cost of borrowing money and can be found through any loan, high interest charges are not ideal.
How Much Cash Can I Get Through a Car Title Loan?
Car title loans can be a great way to make the most of your asset and get the cash you need. But, how much cash exactly can a person obtain through a car title loan?
With a car title loan, your loan amount will depend on a few factors:
- The State Your Vehicle is Registered In
- Your Income and Debt-to-Income Ratio
- The Value of Your Car
There are a few states that have laws that regulate the amount a person can receive through an alternative loan option like a title loan. This applies to both pawn shops and car title loans. If no regulations exist, then your loan amount will be mostly based on the value of your vehicle and your income.1 The more equity your vehicle has, the more you have the potential to borrow from if your income supports it.1
Equity in a vehicle is the difference between the market value of your vehicle and what you still owe on it. Most borrowers are not aware of their vehicle’s current equity, but there is an online tool that can help. ChoiceCash Title Loans offers an online title loan calculator that is made to do the hard work for you! Simply fill out a few details about your car to get a free title quote and equity estimate in no time at all.1
What are the Benefits of Car Title Loans?
Car title loans can offer borrowers more benefits than they may think! While getting the right loan amount is the focus of many borrowers’ search for funds, ChoiceCash Title Loans can offer more benefits to take advantage of besides cash:1
- A Faster Way to Get Your Funds: Time is of the essence for many people who apply for alternative funding. Luckily, qualified borrowers through ChoiceCash Title Loans can get their cash in as little as one business day. 1
- Keep Your Keys: While you will be using your vehicle’s title to secure funding, you can continue your normal driving routine with your vehicle if you make your payments on time.
Where Can I Apply for Car Title Loans Online?
Pawn shops and car title loans can both be found online for your convenience. ChoiceCash Title Loans offers a fast, three-step approval process for qualified borrowers that need their funds in a hurry.1 If a car title loan is the right tool for you, getting started is easy!
Simply place your loan inquiry online and get the loan estimate you’ve been looking for. Borrowers can also choose to call a ChoiceCash Title Loan representative directly at 855-914-2945. They are available for extended hours seven days a week to answer all the title loan questions you may have!