The Real Facts on Title Loans
There are many different loans out there to get you a car. You can get a traditional car loan, buy here pay here car dealership car loan, etc. However, you might have already heard about car title loans.
You might be wondering if they will be more beneficial for you compared to other car loans. To help you understand auto title loans, here is some information that you ought to know.
What Makes a Car Title Loan Different?
Basically, a title loan is still a traditional car loan. Your loan could be considered a title loan depending on the terms that it involves. If the lender whom you got a loan from has a lien, or ownership, over your car until all the total loan amount has been paid off, then it is a title loan.
Therefore, the car that you are going to get will be considered collateral for your loan.
Most loans will be secured loans, which is what a title loan is. When lenders offer secured loans, they will require you to put some form of collateral such as your property on the loan. For auto title loans, the collateral that you will put for the loan will be the car that you are getting.
This is beneficial for people who do not own property, such as people who rent apartments and do not own a house. However, you would risk losing the car as well. Here are some pros and cons about auto title loans to help you decide if a title loan is right for you.
- No Credit Check Title Loans
One of the best benefits that you can get is that majority of title loans do not ask to do a credit check during their approval process. Since you already have a secured loan because the car has been placed as collateral, there is no need to ensure what your credit score is to see your ability to repay the lender back.
The lender already has assurance because the car will be theirs if you fail to make the payments to pay for the car loan. Of course, you should make sure that you can pay them back, but the lender will be able to profit either way, hence why they won’t ask for your credit score.
- You Still Own The Car
Just because the car’s under the name of the lender doesn’t mean that it is not yours. Once the loan is approved and you get the cash to get the car, you can drive the car even while you are paying off your loan.
This means you get to have all of the luxuries of owning the car even if it is under someone else’s name. You can ask the lender that you are dealing with if you will be able to change the title once you have made all of your payments. That way, the car can be truly yours.
- Quick and Convenient
Another great advantage of getting title loans is that they are relatively simple. There are some car loans that take weeks or even months to process until you can get your car or even know if you got approved for a loan.
Thankfully, a title loan is very simple and uncomplicated, as most processes only take a few days to finish. That way, you can get the cash almost immediately to get the car that you like. There’s no need to wait for your car loan to push through when you can have it quickly!
- It Can Be Expensive
This is not always true, because each loan could be different depending on the lender who you are dealing with. However, a title loan runs the risk of being expensive because there can be a high interest rate charged to the total loan amount.
Some can be charged very high and this might be difficult for you to pay off because title loans are usually short-term loans. The issue of you not making your payments could mean the interest rate could keep piling up and you would have to deal with a large amount of debt or just lose the car entirely.
- Less Value
You ought to make sure you know how much your car would actually be worth, because the value of it could greatly decrease when you get it. Most brand new cars tend to lose up to half of their value in just a few years, whether you use a loan or not.
Don’t forget that to qualify for an online title loan, the car that you want has to meet the lender’s required amount. You can’t get a title loan for any random amount unfortunately, so the total loan amount might not be able to cover the costs for the entire car.
Be sure you know how much it is worth and if you can put a large enough down payment on the car to qualify for the amount that a title loan would offer.
- Losing Your Car
Repossession is a real risk when it comes to title loans. You need to be sure that you are capable of paying off the entire loan amount within the given period of time to avoid losing the car. You will not get reimbursed for the monthly payments that you already paid for so you could lose more than just the car.
A no credit check title loan may be a short-term loan, some title loans are as short as 3 months. You need to make sure that you are completely secure in your ability to repay to avoid getting your car repossessed.
Title loans have both their pros and cons, but if you know the right information and get yourself prepared properly, you should be able to reap the benefits of a title loan.
You can learn more about loans on our website and you can use the contact information to ask them questions as well.