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Perhaps you need to pay for a sudden health expense, or you’ve got a broken appliance in your home that needs immediate repair. When emergencies happen, it’s hard to find the support you need as quickly as you need it.
While anyone can struggle to find cash in an emergency situation, the people who suffer the most are usually those with bad credit. Unfortunately, while it takes years to develop a good credit score that attracts the best deals from lenders, a single mistake can destroy your rating.
As people across the US continue to struggle to find fast funding thanks to high costs and low incomes, poor credit ratings are becoming increasingly common.
Since traditional lenders will avoid you at all costs if you want to borrow money with poor credit, you need to seek out alternative solutions. Fortunately, for people who own their vehicle outright, or those who have very little loan left on it, there could be a solution.
Otherwise known as a fast auto loan, car title loans are quick and easy ways to get money for emergencies, without having to worry about a bank. Here’s what you need to know about this kind of lending.
A car title loan is very similar to a payday loan, in that it offers you quick access to money when you need it most. This kind of lending is designed for people who need to access money quickly for emergency expenses like essential bills or debts.
The good thing about title lending, is that it doesn’t matter if you have a bad credit rating. The company that offers you your loan will be getting a kind of security in exchange for the money that they lend you. Basically, this means that when you borrow cash from a title loan, you promise the title to your car to the lender if you can’t make the repayment.
While payday loans are unsecured repayment options, title car loans are secured loans that rely on using your car as collateral. To get one of these online loans, you need to own your car 100%, and you need a clear title, without any liens on your vehicle.
However, similarly to payday loans, car title loans also require you to make your repayments quite quickly, often by your next payday. This means that you can get in and out of debt as quickly as possible, without having to worry about ongoing repayments for very long.
When you agree to a car title loan, you’ll usually hand over the title or deed to your car until you’ve repaid the loan in full. While there are a lot of states that don’t allow weekly installment loans, there are a handful that are beginning to explore this option as an easy and accessible way for people with bad credit to borrow the money that they need.
Depending on where you apply for your car title loan, you may need to visit a lender in person at a physical store, or you could complete the entire process online. If you do complete the application online, it’s a little more complicated than applying for a traditional payday loan. While a standard payday loan allows you to get everything done online and receive the money you need within a matter of hours, car title loans demand that you visit a company in person.
That’s because with title lending, you need to give the loan company physical ownership of your title for a short period of time. This can make the process a little more complicated and lengthy for some customers. You’ll also need to provide some basic proof of ID, such as car documents that specify you own the vehicle, and proof of your car insurance.
The good news is that if you can visit the title lender in person, it’s usually a process of simply walking in and signing a few papers. You then walk away with a direct deposit or check for the amount of money that you need. Not accounting for the time it takes to visit the location, the whole process usually takes less than 30 minutes.
If you get approved for your title loan, you will get the title back when the debt is repaid. You’ll be able to agree on the terms and conditions of the loan with your lender before you sign over your title in exchange for the borrowing opportunity.
The amount that you can borrow from a title pledge loan can differ depending on a number of factors, including the lender that you work with. Usually, you’ll be able to borrow anywhere up to 50% of the value of your car. This means that you can get a few thousand dollars quite easily this way.
When the time comes to repay what you owe, you often make that payment in person, or online through automatic direct debits from your checking account. Like with payday loans, because you’re paying the interest of your title loan all at once, rather than over an extended time, you’ll usually have a slightly higher fee to consider on top of your repayment.
While many people worry that car title lenders will immediately claim their vehicle if they can’t pay back what they owe, this is rarely the case. A lot of companies that provide this kind of lending will be willing to discuss options with you if you contact them and let them know that you need longer to make your repayments. You can sometimes roll your existing loan into a new title loan, for instance.
However, the more you roll over your loan, the more fees you will need to pay. That’s often why people prefer to avoid the stress of a title loan and stick to a standard payday loan instead.
A car title loan is just like any other lending opportunity, it has positives and negatives to consider. On the downside, if you can’t repay your loan for any reason, then the lender will have the right to repossess your car and claim your title. This means that you won’t have your vehicle anymore.
However, regardless of what kind of loan you take out, it’s fair to say that all lenders have the right to seek compensation for the money that they give you if you can’t make repayments. Because of this, a car title loan is no more dangerous than any other loan option.
Additionally, because you’re getting a secured loan rather than a standard payday loan that is unsecured, you’ll have a few more lending options available to you. For instance, the biggest benefit of a title loan is that it’s available to anyone – even people with bad credit, or no credit. In some cases, a title loan provider will only run a soft check on your credit to see if you’re eligible for the money.
This means that you don’t walk away with any black marks on your credit report. On the downside, the lenders also won’t report your payments to the credit agencies, so your credit score won’t improve either. Because of this, if you want to improve your credit rating, it’s probably better to choose a standard payday loan instead.
Another major bonus of a title loan is that you can usually borrow a lot more this way than you could with a payday loan. You need to be earning a certain amount of cash every month to get a specific amount of money, but if you can prove that you can make the repayments, you’re free to borrow up to 50% of your car’s value.
Alternatively, most payday loans do put limits on the amount you can borrow, which makes it harder to get all the cash that you need at once to deal with an emergency.
If you decide that a car title loan is the best way for you to lend, then you’ll need to go out and find the company that’s right for you. There are many different loan providers available today that offer this kind of payday loan. Comparing your options will help to ensure that you’re getting the best interest rates and the lowest fees.
You can also do some research into the solutions available in your specific state or area when you’re doing your research. For instance, the Military Lending Act offers special support for people in the military and their dependents when taking out any kind of loan – including a title loan. It’s worth looking into this extra protections if you can get them.
Once you’ve found the title loan that’s right for you, it’s simply a matter of signing on the dotted line, making your repayments, and walking away with the cash that you need, without the stress of any long-term monthly installments.
Could this be the right lending option for you?