When your credit isn’t great and you need some funds, you may look into getting a loan somewhere that will accept low credit scores. Title loan lenders aren’t as stringent about credit history and usually have other terms for lending. A short-term loan with your car as collateral may fit your needs.
The interest on a title loan is higher than on conventional loans. But if you repay on time and within the loan terms, a title loan can be helpful for those without good credit. It can also help rebuild credit while getting you the funds you need.
What is a Title Loan?
If you aren’t familiar with title loans, they are loans secured with the borrower’s vehicle as collateral. The car secures your loan instead of your credit history, and the lender can take your vehicle if you don’t make your loan payments on time. These loans can be easier to get than traditional loans because poor credit doesn’t automatically disqualify borrowers.
The terms are not as favorable as traditional loans offered by banks and other financial institutions. They are normally high-interest, short-term loans with different requirements than other loans. Credit scores are not as important for title loans.
How Does a Title Loan Work?
Title loans may be easier to get than other loans, but they are not without risk. They are available to borrowers who own their vehicles and have a clear title. Most lenders will inspect the car and require proof of ownership and a valid driver’s license.
If you are approved and accept the loan terms, you’ll have to give the lender the title to your car until the loan is paid. Most title loan lenders charge a pretty high annual interest percentage. And the loan amount plus interest and fees are all usually due to be paid back within 30 days, or you lose your vehicle.
Pros and Cons of Title Loans
You can borrow up to 50 percent of the value of your car. Most title loans won’t require a credit check, making them attractive to those with poor credit. There’s usually a quick approval process and quick access to funds.
However, you have to be able to repay within the terms of the loan or you lose your vehicle. Title loans are advantageous if you are certain that you’ll have money coming in at a near-future date to cover the loan and interest.
When you need some funds quickly but have a spotty or poor credit history, you may want to consider a title loan. Lenders like Tio Rico Te Ayuda can help borrowers in need. You can get a loan within minutes with proof of car ownership, clear title, and valid driver’s license.