Many people turn to car title loans to help cover urgent financial needs such as unexpected travel or funeral costs. After all, auto equity loans offer several benefits. You don’t always need good credit to get one, nor do you need a bank account.1 And, you can get your cash quickly. All you need is reliable income and a vehicle titled in your name.1 As good as that sounds though, you may be wondering; “Can I still drive my car with a title loan?” The answer is yes, absolutely. You can keep your vehicle and drive it wherever you’d like, as long as you make on-time payments. In fact, that’s a key feature of title loans.
What are Title Loans and How Do They Work?
Car collateral loans can be helpful when you have urgent expenses, but aren’t eligible for traditional bank loans because of credit problems. This is because auto title loans let you use your vehicle, registered in your name, as collateral. To qualify for car title borrowing, your automobile must be of sufficient value to support a loan – and you must prove you have the income to make consistent payments. You must also be at least 18 years old and live in the state in which you’re applying.1
Depending on the lender, the state in which you live and your income, you may be able to borrow up to half of the equity in your vehicle.1 Lenders will determine the value of your automobile based on its make, mileage, year, and condition. LoanMart-serviced title loans allow you to borrow as little or as much as you’d like, as long as the amount you request is within your approved range.
The application process for title loans serviced by LoanMart can be conducted online, so it is usually fast. You can be approved in less than an hour, and you could have the funds in hand by the next business day – sometimes even sooner.1, 3 Once you receive your loan funds, a lien will be placed on your vehicle’s title, which will be removed when you pay the loan off.
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Driving Your Car During the Loan Period
As mentioned above, you can use your vehicle as usual while you’re repaying the loan – provided your agreed-upon payments are made on time. This differentiates title loans from most car pawn loans, which require you to surrender your vehicle until you pay off your loan. However, it is essential to understand that if you miss payments, lenders have the right to seize and sell your vehicle to pay your loan balance. If you encounter a situation in which you anticipate being unable to make a scheduled payment on your LoanMart-serviced loan, get in touch with us right away at 855-422-7412 so we can help you work something out.
Maintaining Your Vehicle Before and During the Title Loan
Your vehicle must be running and in acceptable condition in order to qualify as collateral for a car title loan. Vehicle condition and eligibility requirements may apply and be specific by each lender. Also, because your vehicle secures your loan, you’re responsible for maintaining it properly during your loan term. This includes standard maintenance like oil changes and also making necessary repairs if needed. Depending on the lender you choose, you may also need to carry a specific minimum level of insurance for your vehicle during the loan.
Managing Your Title Loan Responsibly
A title loan can be a convenient way to quickly resolve a cash shortfall. However, you must be careful to manage your loan responsibly to ensure it goes well. With that in mind, here are some vehicle title loan management tips.
- Borrow only what you need. While LoanMart-serviced title loans allow you to borrow whatever amount you wish – within your approved loan range – you should avoid overextending yourself. Borrowing only what is necessary will help you keep your financial obligations manageable and reduce unnecessary stress.
- Create and commit to a budget. A well-structured budget is essential to maintaining financial stability – and making your loan payments on time. In addition to allocating funds for regular expenses, set aside an emergency reserve just in case. Also, planning your spending will help prevent impulsive or unnecessary purchases.
- Spend responsibly. Resist the urge to splurge. This might diminish your ability to make timely payments. Use your funds strategically. If you have cash left over after meeting all of your budgeted needs, consider using it to make extra loan payments.
- Pay off your loan early. The fastest way to ease the burden of debt is pay it off ahead of schedule. To accelerate repayment, consider selling unused assets or valuables. Title loans serviced by LoanMart can be paid off early without penalty.
Alternatives to Title Loans
While title loans have helped scores of people out of financial trouble, it is always a good idea to examine some alternatives. While none of the following offer the same ease of qualifying and the flexibility of borrowing against your car’s title, they have proven effective under certain circumstances.
- Credit union loans
- Bad-credit personal loans
- Payday loans
- Credit card advances
Each of these borrowing options has certain benefits, as well as drawbacks, so it is useful to examine how they compare to vehicle-secured loans.
Credit Union Loans
It’s sometimes easier to qualify for credit union loans than traditional bank loans. Credit unions also typically offer lower interest rates and loan fees than title loans. However, you typically must join a credit union before applying, which adds an extra step. Also, some credit unions offer smaller maximum loan amounts than traditional lenders, especially for unsecured loans. With that said, while unsecured credit union loans can be less costly than title loans, qualifying for them is also usually more difficult.
Bad-Credit Personal Loans
Some online lenders approve borrowers with low credit scores, but almost always at higher interest rates and for smaller amounts than standard personal loans. In other words, while bad-credit personal loans are offered, they can be quite expensive and may not be the solution you need. After all, weaker credit can mean higher interest rates and smaller loan amounts. And yes, LoanMart-serviced title loans require a credit check as well, however poor credit is not always a barrier to getting the loan you need.1
Payday Loans
Payday loans offer quick access to small amounts of cash, often within the same day. Further, they typically don’t require credit checks or the completion of mounds of paperwork. However, title loans serviced by LoanMart can carry lower interest rates than payday loans. Another thing you need to watch out for with payday loans is how easily they can trap you in a cycle of debt.
Credit Card Advances
Credit card advances provide quick cash, but usually come with high fees and interest charges. They also increase your credit utilization, which can lower your credit score. On the plus side, immediate funds are available at ATMs or banks, which is ideal for emergencies. However, you must also have enough available credit to cover your emergency. And of course, you’ll need a credit score high enough to qualify you to get the credit card in the first place.
The bottom line: car title loans offer an easy and convenient way to get out of a financial jam – while allowing you to keep your car and drive it as usual. Apply for your car collateral loan serviced by LoanMart today to see how quickly and easily you can get the cash you need!1
