What Are Car Title Loans and Can They Help You?

If you need money fast to pay bills, or a home emergency has struck, a car title loan is designed for people like you. To qualify for a car title loan, you must own your own vehicle or owe very little on it. Should you not keep up with repayments, you will risk your car being possessed. To give you more clarity, here is a guide on what car title loans are and how they can help you.

What Is a Car Title Loan?

Title loans are very similar to payday loans and they work in much the same way. Like payday loans, car title loans are short-term and the lender doesn’t perform a credit check on the applicant. Unlike a payday loan, however, a car title loan is secured on an asset, which in this case is your vehicle. The amount you can borrow is determined by the value of your vehicle and where you live. So, if you own a BMW in mint condition and you live in Beverly Hills, you can borrow a lot more than someone trying to borrow against a wreck whilst living in a trailer park in Detroit.

Applicants can borrow as little as $100 and as much as $10,000.

How they Work

Car title loan applications are usually done online. You can normally borrow between 25% and 50% of the car’s value, and you must own the car’s title. Cars covered by an existing finance agreement through another lender are not eligible for a car title loan.

To complete your application, the lender will want to see the vehicle, a clear title, proof of insurance and photo identification. If you can’t repay the loan on time, the lender has the ability to repossess your vehicle and sell it to get their money back.

The Effect on Your Credit Score

Car title loans are a great way to get instant cash. However, if you don’t repay the loan, it could push you into more debt. Car title loans charge higher than usual rates of interest, although not as high as bad credit payday loans. The earlier you pay off your loan, the less it will cost you, so don’t borrow more than you can afford.

In most instances, a car title loan Bloomington il won’t have any impact on your credit score. While this may sound great, there are some cons too. Not only do most car title lenders not run a credit check, but they don’t report your payments to the credit bureaus, meaning this kind of loan won’t benefit your credit score if you’re trying to improve it.

Reasons to Take Out a Car Title Loan

If you have a home emergency that needs sorting immediately, a car title loan can be a good way to cover the cost and bring you peace of mind. They can also be useful for managing debt, paying unexpected bills and covering the cost of an upcoming family vacation.

If you need quick cash and you have bad or no credit, a car title loan may be the best option to take. To avoid paying additional fees or losing your car, make sure that you read the terms and conditions and stick to the repayment schedule.



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