When in need of financial support, there are a lot of options to consider. However, they may not all be a good fit for you. If you’re wondering if a title loan could be a good idea, a good starting point to answer this question is having a sound understanding of how title loans work.
A Quick Overview How Title Loans Work
Title loans are cash loans made to borrowers who are using their paid-off or almost paid-off vehicle to secure the loan. Being willing to borrow against the equity value of their vehicle can allow loan applicants with less than perfect credit to qualify for the funds that they need.1 Since auto title loans are secured by an asset, title lenders place more importance on the value of the asset and the borrower’s ability to repay a loan than they do on the borrower’s credit history or credit score.
Why Title Loans Can Be a Good Idea for Funding
Title loans can be a good idea for funding if you need quick emergency cash without the hassle of a long loan underwriting process. By using your car’s title as collateral, you may be able to access benefits that make borrowing funds a lot less stressful.1
Take a look at some of the benefits that might make a title loan a good choice:
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- Longer Repayment Terms1: If you want more time to repay your loan, a title loan can be a good idea. Though considered a short term loan option by some, you may be able to receive more time to pay back the funds than you would with other similar loan options.1
- Comparatively Low Monthly Payments: Your monthly loan payments should not disrupt your life. Title loans are a good option because you could get affordable payments that don’t stress you out each month.
- Competitive Interest Rates: Interest rates for some credit products can reach very high levels, especially for loan options that primarily cater to applicants with bad credit. Title loans may be a good idea if the lender you applied with offers competitive rates that keep in mind that the use of your vehicle lowers the lending risk.
- Quick Emergency Cash: If you have upcoming due dates, you may need financial support as quickly as possible. Title loans can be a smart idea because you may be able to get the money you need within just 24 hours after approval!1, 3
Alternatives to Title Loans that Might Be a Good Idea for You
There are a few factors you should consider before making a final financial decision, such as how much you need, how much you can afford to pay each month, and how long you want to repay the loan.
Besides auto title loans serviced by LoanMart, you could also consider the following options for funding:
- Payday loans: These loans are meant to be a short term loan for those that only need a few hundred dollars until the next payday. If you need more money, or don’t think you can repay the loan within two weeks, a payday loan may not be a good idea for you. While payday loans may rollover, you could end up with costly interest fees that make repayment harder than it needs to be.
- Bank loans: Many bank loans are unsecured, meaning that an asset is not required for approval. However, the approval process can be tedious and the eligibility requirements may be strict. If you don’t have an existing bank account or good credit, most bank loans may not be a good idea.
- Family or Friends: If you have the ability, asking a family member or a friend for emergency cash could be ideal. By borrowing money from people you know, you could save on interest charges and receive flexible repayment terms. However, involving finances can be risky to any relationship.
Are Title Loans a Good Idea if I Have Bad Credit?
If you have bad credit, you may be concerned about your eligibility for loan approval. With title loans, you may still qualify despite having bad credit if your car has sufficient equity. And if you don’t have an established credit history, it’s possible you could also still be deemed eligible.1
Why are qualification requirements so flexible? During the title loan approval process, a lien is placed on the car title. This secures the loan and gives the loan company temporary ownership of the car until repayment has been complete. The lien lowers the lending risk, allowing more people in need of emergency funding to potentially qualify.
Title loans may be a good idea if you have less than stellar credit and you need some financial stability.1
How to Apply for Title Loans Online?
Online title loans offer the benefits of traditional title loans with a hassle-free process that can be completed almost entirely online! There’s no need to schedule an appointment or speak to a loan agent in person when you could easily start an application online or over the phone. The title loan approval process usually requires no more than a few simple steps, and once approved, you could look forward to receiving your title loan money in as little as one business day.3
After a thorough evaluation of your financial options, you may eventually decide that a title loan is a good idea for your current situation. If that’s the case, apply online for a title loan serviced by LoanMart today!
