Auto Title Loans are becoming quite the hot commodity in the United States for people from all walks of life. Though they’re not the household name, one can gather that generalized assumptions are that they are quick loans an individual can get in a jam by forfeiting the title of their car. Let’s set the record straight by answering the million dollar question: are title loans worth it?
What’s an Auto Title Loan?
An Auto Title Loan is a loan that is based on the equity of a person’s drivable motor vehicle. Generally, when qualifying for said loan and depending on the lender, a customer will have to relinquish the vehicle’s title to the lender, as they will become the new lien holder. The lender assumes this duty over the course of a customer’s payment period or payment plan schedule. In some cases (like with the folks at LoanMart), a customer will continue to have use of the vehicle.
What is Equity in a Motor Vehicle?
Homes and motor vehicles (cars, trucks, RVs, motorcycles, etc.) are two of the most common things that people own that are considered assets when loans are often involved. When considering a purchase of a means of transportation or base of operations and shelter, many people take out a loan to get achieve these goals, knowing that they will end up having to pay them off later.
Say you have a financed car or a home mortgage, as it is not an uncommon trait in this day and age; these properties will either have positive or negative equity. If the piece of property you own is worth more than the balance you still owe on a loan, it has positive equity, whereas, if the balance is more than your house or vehicle is worth, it will have negative equity. So, when someone has equity in their vehicle, it means that it is worth more than what they still owe on it. Essentially, equity tells you how much of the car you actually own, and you can calculate your car’s equity with minor math by subtracting the total amount you still owe to the financial institution or dealership from the actual value of the car. That’s the easy part. To find out the numbers you need to perform the problem, you can get your vehicle appraised at a dealership or on Kelley Blue Book, and obtain some of the loan information from your lender.
Who Are Title Loans For?
Auto Title Loans are for anyone and everyone. Folks from all walks of life might be able to obtain an Auto Title Loan in a few simple steps—it isn’t the time consuming process that banks, credit unions, pawn brokers, or other financial intuitions may stretch out over the course of several weeks to a few months. That being said, a majority of loans depend purely on credit history. If you have great credit, then you’re more than likely in the clear and could get approved for a title loan a few short hours after you’ve submitted your application. If you have fair, poor, or a bad credit history it may seem impossible to get the money you need. Loans are incredibly important to a lot of families in the United States for financial growth—mortgages and vehicle financing—as it’s a means of being trusted for future loans and expanding your credit limit.
Beware “Bad Credit” Loans
You may have heard of loans marketed towards individuals with a poor credit history; Payday Loans or “Bad Credit Loans” aren’t the most viable options, but because of their obtainability, many people often turn to them with little to no knowledge of what they’re actually getting into. Payday loans tend to have shorter terms with a high interest rate and the usual average is between $300 and $500. While this doesn’t sound like too much of a risk, after a week the loan picks up interest, which wouldn’t be as bad if you weren’t supposed to have the full lump sum paid. Bad credit loans are a type of unsecured loan without collateral. Lenders offer repayment stipulations that traverse several months, no collateral, and high interest rates—due to a customer’s poor credit history. Beware of your bad credit in this situation: lenders may claim to offer loans to people with bad credit, but they are often denied once they apply. It isn’t fair but because the majority of Americans are ignorant of the subject matter, things tend to work out in the lenders’ favor.
Why Title Loans Are Worth Your Time
Are Title Loans worth it? Unlike the aforementioned junk loans, Auto Title Loans are less of a risk for the lender, as well as the customer. With LoanMart, an Auto Title Loan could give you a larger loan amount that anticipated, a flexible and comfortable payment period (ranging from a few months to a few years), and most importantly, much more affordable interests rates than what other similar lenders are offering. While your credit is important, it is your vehicle that makes all the difference to get the money you deserve.
Owning a motor vehicle (sedan, pick-up, 4×4, Winnebago, minivan, or whatever) with a source of income and residency could fast-track to obtain this loan. Auto Title Loans, as previously stated, rely on the equity (value and condition) of your vehicle, rather than being associated with your less-than-stellar credit score.
LoanMart realizes that not many people have an asset as essential as a house to use as a means of collateral. From a contemporary (albeit generalized) standpoint, Auto Title Loans make sense because the majority of Americans still have some sort of vehicle to their name despite not being a homeowner. The use of your car is important because it acts as a guarantee for this type of loan, called a secured loan. Unsecured loans exist, but without some type of collateral, these loans present a greater risk to a lender, especially with customers with low credit—this is usually where your low-credit will be reviewed, and why you’re seen as a high-risk, and usually denied. With secured loans, using your valuable motor vehicle as collateral gives less risk to the lender, hence why it is easier to obtain this type of loan.
So, Are Title Loans Worth It?
From a logical and fiscally responsible standpoint, yes, Auto Title Loans are worth the minimal hassle that they may incur. Auto Title Loans don’t take your credit rating into account as much as most other lenders in the loan industry do. LoanMart looks to the future and sees your financial burdens withering away because of the help that they were able to give, including allowing their customers to continue to use their motor vehicle during the flexible payment period.
Car Title Loans with LoanMart
With LoanMart, there’s no need to worry about your low-credit score, so that you can obtain the money you need and get out of the financial problems of your past, and only look towards the future. If you’re interested in an Auto Title Loan with LoanMart, give us a call at 1-844-237-5530 or visit us at one of our convenient and helpful locations.