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Is It Worth It?: The Top Benefits of Car Title Loans
Do you struggle to get a traditional personal loan from a bank? Maybe you made some mistakes with your credit. Perhaps, like an increasing number of people in Ontario, you work in the gig economy and don’t earn a regular wage.
The conventional banking system isn’t a one-size-fits-all option that covers people in all circumstances. That’s why other types of credit continue to pop up: to serve those who the banks leave behind.
Auto title loans are one of those lending opportunities. With a car title loan, you borrow against the value of your car. Is an auto title loan worth it? Keep reading to find out if it could help you get cash fast.
What Are the Benefits of an Auto Title Loan?
Auto title loans(or car title loans) offer a chance to get cash quickly. Unlike other forms of credit, they don’t require long applications or underwriting. An application takes ten minutes, and lenders provide the cash on the same day (or next day).
A second benefit of the auto title loan is that it allows you to work with what you have today rather than what you aspire to have later. Building credit is a long process, but owning a car is much easier. Whether you own a car, truck, SUV, or even a motorcycle, you can borrow by using your vehicle’s title. The title (along with proof of income) is all you need. No aspirational credit scores are required.
There’s no credit check involved at all. You can borrow against the following vehicles as long as you own them free and clear:
Car title loans are also more forgiving than a cash advance. Because the loan provider has a car as collateral, there’s less risk, which means interest rates and fees are often lower. The repayment options are also made apparent upfront, so you always know what you need to pay and when.
An auto title loan might sound too good to be true, but it gets better. While you do have to pledge your vehicle as collateral until you pay the loan back, you keep your car for the loan period. You can go where you want when you want.
Ultimately, what makes a car title loan worth is stress relief. You can get cash quickly without worrying about the fees and interest rates that trap people in debt with payday loans. Borrow what you need, pay it back (plus interest), and call it done - all without damage to your credit.
Make It Worth It: Enter an Auto Title Loan with Your Eyes Open
There are real benefits to an auto title loan compared to payday loans, cash advances, and even traditional lending.
However, as with any form of borrowing, auto title loans work best when you are aware of the terms and expectations.
Most auto title loans are for small amounts of money, which you borrow over one year, (maybe for longer or shorter periods too). In the end the total cost to you for an auto title loan is much less than what you would experience under other types of loan arrangements.
To make the most of the loan, it is important to only borrow as much as you can afford to payback within the term of the loan. That means avoiding borrowing excessive amounts.
When you borrow too much, you increase the likelihood that you might need an extension. Extending auto title loans is always possible, but why not avoid doing this? As your debt grows, you become less likely to be able to pay it back. It can spiral out of control and cause unnecessary worries.
How to Make Sure You’re Ready for a Car Title Loan
Is a car title loan right for you? The answer to that question lies not only in your finances but also in your ability to hunt down the right loan.
Before you sign the dotted line, you always need to talk to the title loan lender to feel them out and assure yourself that they are the right people to deal with, that they will understand your position should you run into problems, and be willing to help you out more further down the road.
You should know every detail before you jump into it headfirst.
Additionally, work with lenders who work within the traditional title loan parameters: short-term loans with reasonable repayment terms.
Don’t fall for the low monthly payment promise; you may pay a low sum every month, but in the end, you pay back exponentially more than you borrow. Typically you should be able to borrow about50 percentof your vehicle's Black Book value.
Finally, consider adding a co-signer to your loan. Your co-signer improves your likelihood of approval if your assets are minimal, and they are also one more layer between you and the lender in case something goes wrong. Make sure your co-signer knows the terms exactly and understands that they must also own a vehicle that meets lending criteria.
How Will a Title Loan Help You?
A car title loan can help you out of a tough spot without the interest rates of a payday lender or the strict requirements of a conventional bank. When you use a car title loan, it is important to understand that you get out of it what you put into it. Borrowing sensibly and learning the payment terms before you apply can prevent your debt from becoming unmanageable.
Do you need some extra cash but don't qualify for credit elsewhere? We can help. Click hereto learn about our eLoan process and learn how you can get up to $25,000 on the value of your car today. With the eLoan, there is no need to drive to the lender’s physical office, but rather can apply for the loan and receive it from an offsite location.