All You Need to Know About Getting a Car Title Loan

Everything You Need to Know About Getting a Car Title Loan

Managing your money is no easy feat, particularly with rising debt levels and financial hardship becoming commonplace in the wake of COVID-19. If you’re experiencing some financial stress, you may find yourself considering a loan.

Taking out a loan of any kind is a major decision, as it can greatly impact your overall financial well-being. With that in mind, it’s essential to stay informed of your options and the potential effects of taking out certain loans in order to make the smartest possible decision.

One type of loan you may be researching is a car title loan, which is a secured loan in which you, the borrower, use your vehicle title as collateral. There’s a lot to know when it comes to car title loans, so it’s understandable to have many questions regarding the process. Fortunately, this guide provides the answers to all your burning title loan questions. Read on to learn more.

How do these loans work?

You can usually start a car title loan application online or at a lender’s store. The loan amount can vary, but it is usually 20%-50% of the value of your vehicle. Since you’re going to be using the car as collateral, you need to own it free and clear and have the title in your possession. In other words, if you’re currently using a car financing program through another lender or leasing your car, you won’t be eligible for a car title loan. In order to complete the application process, you will need to bring your vehicle to the lender’s office along with your government photo ID and proof of insurance. The lender will assess the make, model, and condition of your car to value it and subsequently determine the value of your loan.

The good thing to consider is to know a loan company is you should see the LoanMart reviews of a company before you choose it.

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Can I still drive my car if I get a car title loan?

When you take out a car title loan, your car title is the only thing that the lender keeps as collateral, meaning you can still keep and drive your car as you normally would while you’re repaying the loan. Once you’ve repaid your loan in full, you will receive your car title back.

Car title loans are secured loans – but what’s the difference between a secured loan and unsecured loan?

Personal loans, which include things like credit card payoff, car financing, and education, generally fall into two categories: unsecured and secured. An unsecured loan, also known as a signature loan, requires only your signature to be granted. These types of loans do not require any kind of leverage or collateral, and therefore typically have higher interest rates attached to them. Secured loans, on the other hand, require leverage before they can be issued to you. Such leverage includes personal assets, such as your house, personal savings, or in the case of car title loans, your vehicle. While these loans come with lower interest rates, you run the risk of losing your assets if you do not repay the loan.

Can I take out a car title loan if I don’t have a job?

The short answer is yes. If you’re wondering how to get a title loan without a job, don’t stress – it’s probably easier than you’re expecting. These loans are actually an excellent alternative for borrowers who may have trouble getting a loan from traditional lenders. Many traditional lenders examine your income or your credit score to decide whether or not they will grant you a loan. If your income and/or your credit score is too low, you will often be automatically rejected. However, these loans are a great option because your car is an asset you already own and can therefore use as leverage. In order to get a car loan, lenders usually do not require proof of employment or income.

Will a this loan affect my credit?

While many lenders don’t need to assess your credit score to grant you a car title loan, you may still be wondering: will the title loan affect your credit? In most cases, it will not, which can be both a pro and a con. On the positive side, since most lenders don’t run credit checks when you apply, you avoid that undesirable impact on your score (these checks can often knock five points from your credit score). On the flip side, for this same reason, car title loans aren’t great for helping you build credit, which you may be trying to do in the hopes of applying for a loan with a traditional lender in the future.

Is it worth taking out a car title loan?

The answer to this is completely dependent on your current financial situation. There are a few key questions you should ask yourself before taking out any kind of loan, including a car title loan. What do you need the money for? How much money do you need? Will you be able to pay the loan back? It’s also worth asking yourself how badly you need the loan and whether or not you have alternative methods of acquiring the money you need. Do you have personal savings you could use? Could you borrow the money from a friend or family member rather than accruing interest on a loan? Ultimately, the best way to decide if a car title loan is worth it for you is to take stock of your current financial standing and all of your available options.

Taking out a loan isn’t a lightly made decision, but it also isn’t something to be ashamed of or shy away from, especially if you really need it. If you’re unemployed or don’t have the strongest credit score, you still have plenty of loan options available to you, including car title loans. In educating yourself on the perks, risks, and important considerations associated with car title loans, you’ll be better prepared to make a smarter financial decision for yourself.