A Guide to Title Loans

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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!

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 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.

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 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.

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 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:

  1. The Borrower’s Ability to Repay the Loan
  2. 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:

  1. 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 you’ll pay off in the long run. Secured loans generally offer more competitive interest rates, and title loans are secured loans through your collateral.
  2. Available Funding: Another benefit of choosing a title loan is that the available funding can potentially be higher than an unsecured loan. Unsecured loans generally base your funding amounts on your credit. However, secured loans like a title loan can potentially offer larger funding amounts if your collateral has higher value.1
  3. Flexible Approval: Since collateral is the primary basis for loan approval, it can be much more flexible than traditional loans! Even if your credit is less than ideal, it won’t necessarily lead you to being denied a title loan.1
  4. Fast Funding: Most borrowers that receive approval can get their funds in one business day!1
  5. Keep Driving Your Car: Even though you are using the title of your vehicle to secure the loan, you can continue to drive your vehicle as you normally would during the repayment process.2
Are There Risks with a Title Loan?

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:

  • Lowered Credit: If you fail to make your payments, it will generally reflect negatively on your credit score
  • Repossession: Additionally, if you choose not to make your payments, your car could potentially be repossessed. However, that is usually the last solution a lender will take, as it is costly for them and often doesn’t repay the entirety of the loan. Instead, a lender would rather work with you to come to an alternative arrangement. Things happen, and your financial situation might change because of job loss or other unforeseen predicaments. The best solution is to communicate with your lender and work out a solution!
  • High Interest: One of the drawbacks to an auto equity loan can be the interest. Some title loans will have high interest rates available. However, other title loan options like ChoiceCash Title Loans serviced by LoanMart have competitive rates that won’t break the bank!
What are the Requirements for a Title Loan?

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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:

  • Enough Equity in Your Vehicle: In order to qualify for a title loan, your car must have a certain amount of value. Generally, a title loan will offer up to 50% of your vehicle’s value, so the more your vehicle is worth the better!
  • Clean and Clear Title in Your Name: To qualify, the title must be lien-free, and must be in your name.
  • Be Over 18 Years of Age or Older: To sign a loan contract, you’ll need to be at least 18 years of age!
  • Be Able to Prove Your Ability to Repay the Loan: You want a loan you’ll be able to afford. Proving your ability to repay the loan can be done through your income, or other forms of revenue that you receive to pay for necessary items.
How Do I Get a Title Loan Online?

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:

  1. Submit a Form Online or Over the Phone: To get started, borrowers will need to fill out a quick inquiry form with their basic information. This process can be done over the phone through a loan representative as well! The initial part of the inquiry process can help a loan agent prequalify a vehicle, and potentially speed up the approval process.
  2. Gather the Right Documents: Like with any loan, you’ll need to submit a few documents online to get qualified. Fortunately, these are documents you already have handy! Borrowers will need to submit via fax or email these documents:
    • Government or State Issued Photo ID
    • Proof of Residence (Utility Bill, Recent Mail, Etc.)
    • Proof of Income (Paystub, Bank Statement, Etc.)
    • Title to your Vehicle
    • Four References are Sometimes Required (Personal, Professional, or Both)
  1. Get Your Cash: After submitting your documents, the last step is to get your funding if you receive approval! Borrowers can choose between a variety of ways to get their funds:
    • Check in the Mail
    • Direct Deposit
    • Any Local MoneyGram Location
Will a Title Loan Affect My Credit Score?

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.

What are the Alternatives to a Title Loan?

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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:

 

  1. Payday Loans: These loans were created to help you make it to the next payday. They are typically $50-$500 per loan, and are expected to be repaid within two weeks. While these can be ideal for fast cash, they often charge high fees with very small loan amounts offered.
  2. Pawn Title Loans: While title is included in the name, they are different from a normal title or auto equity loan. Instead, pawn title loans will only give you a short amount of time to pay it back. Additionally, pawn title loans will only offer a percentage of the vehicle’s used value.
  3. Cash Advance: A cash advance is a way to borrow money from yourself. If you have a credit card, you can ask your creditor for a cash advance on your available credit. This is an easy way to get cash, as you will not need to apply for anything if you already have a credit card on file. However, a cash advance will reflect on your bill the same way a purchase in store would, and you will generally pay the same amount of interest. It is recommended that you only choose this option if you have a low interest rate on your card, or you can pay it back in a month.
  4. Personal Loan: Another alternative to an auto advance loan is a personal loan. This can be an excellent option if your credit history is good, as it will base your loan amount and eligibility off your score. Generally, personal loans can be anywhere from $1,000-$50,000, but it depends on your income, and your ability to pass a hard credit check. If your credit is less than ideal, this might not be the best option for your finances.
Can I Get a Title Loan Fast Online?
Title loans were created to be a fast, efficient way to get your funding. If you’re ready to get started on your loan, there are a few ways to choose from:
  1. Fill out a loan inquiry online in just a few minutes through ChoiceCash Title Loans.
  2. Call a ChoiceCash Loan representative through the toll-free number 1-855-914-2945 to speak with them directly!
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