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, you’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!
If a title loan is a new resource for you, you might have some questions. 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:
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 car’s current equity and use the title as collateral for the loan. Since your title will be the collateral for the loan, the loan is then secured. Typically, a title loan will allow you to borrow 5% to 50% of the equity in the car. Depending on the equity, you might get anywhere from $1,000-$10,000.
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 you’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. 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.
Car title loans are a popular type of alternative loan among those with fair or poor credit, as a borrower’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 Instead of just your credit, title loan approval is more focused on:
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
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:
The potential risks associated with a title loan are those that come with taking out any loan. Some risks that are associated with a title loan are:
Before you decide to apply for an auto equity loan, you might be wondering if you’ll be able to meet the requirements for approval. While it can seem like a stressful process, meeting the requirements may be much easier than you might think. The exact requirements can change state by state, but usually, potential borrowers will need to meet these following requirements:
If you’re busy and on the go, chances are an online loan is the right option for you. Getting an auto equity loan online can be easy, and will just take three simple steps:
One of the biggest concerns that potential borrowers might have is how a title loan can potentially affect their credit score. Making timely payments on the loan can reflect positively on a credit score in the long run, which is easily done every month. Additionally, as you continue to pay down your title loan, your credit usage will decrease, which generally reflects positively on your score as well.
Choosing the right loan option is crucial to building your financial stability. Choosing the wrong loan can result in a worse financial situation than when you started, so it is important to find one that works for you. Some of the alternatives to a title loan are:
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