Maximizing Gains: Exploring The Benefits Of Title Loans
by Ankita Tripathy Loans & Credit 20 November 2023
Title loans refer to secured loans that utilize your vehicle as collateral. The true value of your car decides the amount you can borrow. In several cases, you need to repay this money within a month.
In this article, we will be discussing the various aspects of title loans and how you can maximize gains. So, stay tuned and keep discovering more about it.
How Does A Title Loan Function?
Out of all the forms of this loan, the most common one is a car title loan. Here, a prospective borrower has to own a vehicle outright, along with signing the title of the car. The latter gets passed on to the loan company, which lends up to 25% of the vehicle’s value to the borrower. They keep the rest as collateral of the car’s title.
Usually, a car title loan is $1,000 or more than that. However, the length of loan repayment is between 15 to 30 days. Borrowers get the chance of repaying their title loan in either single or multiple payments. It all depends on the type of car you are owning and how old or new it is.
Here Are Four Prime Advantages Of Title Loans
This article will delve deeper into the benefits of title loans, exploring the convenience they can provide borrowers within the United States.
1. Application Process: Quick and Easy
A major benefit of securing a title loan is its easy-to-apply process. In most cases, all individuals must fill out short online forms or call their nearest title loan lender. The team usually tackles the rest of the work.
However, it’s important to remember what you must provide: Your vehicle’s make, year, and model, your contact information, vehicle mileage, vehicle title, and driver’s license number.
2. Approval Process: Fast Turnaround
In contradiction to traditional loans that can take days or even months for approval, title loans are usually approved within days of application. The fast process of approval is because the value of your vehicle secures car title loans.
This can be an excellent option for individuals looking for immediate funding for economic emergencies. So whether you are exploring title loans in florida, Michigan, or California, you can expect a quick turnaround.
3. Bad Credit? No Problem
Another advantage of title loans is that you don’t require a good credit score to get one approved. This is mainly due to the fact that title loans have your vehicle’s security, meaning the lender owns far less risk. Hence, individuals looking to get money but are worried they can’t because of bad credit scores achieve peace of mind.
Furthermore, if you can repay your car title loan timely, it becomes a positive indication of your credit report. Eventually, it will boost your credit score. This makes title loans a fantastic way for individuals to enhance their credit scores and eliminate lousy credit history.
4. Larger Loan Amounts
Finally, the last key benefit of title loans is that individuals can access more significant loan amounts in comparison to unsecured loans. This is because title loans have security by your vehicle. Lenders will usually allow individuals to borrow 25 to 50% of the entire car’s value.
Hence, it means you have the potential to access an enormous sum of money immediately.
Essentially, this means that if your vehicle is more expensive or a new one, you can borrow more money as a protection. However, there is no limit to the borrowed money even if your car gets a bit old.
What Are The Risks Associated With This Loan?
Title loans might sound alluring, although they come with their fair share of risks. From exorbitant costs to exceeding time durations, everything can give a pause to the borrower. Today, we will be checking out the risks associated with car title loans:
- In case you default on a car loan, there are chances of the lender repossessing your vehicle. A study has discovered more than 11% of borrowers had to deal with car repossession. They are of the opinion that once they repay the loan along with additional fees, they get their vehicle back.
- Losing a vehicle is a major turnoff, especially when you are the sole bread-earner of the family. Almost 35% of the population tries to make ends meet by working dual shifts and so. Hence, giving up a car you own can be the last thing they want to witness.
- Once you make up your mind to repay the loan, the loan amount is not the only thing you will have to worry about. Just like any other loan, the interest on car title loans keeps increasing as the number of days increases. Thus, you might end up facing a difficult situation money-wise.
A Few Alternatives Of Car Title Loans…
It is quite predictable why people turn to car title loans as their ultimate option. Firstly, the process is very quick, and secondly, they do not ask for a good credit score. Also, no proof is required for your ability to repay the loan. Sounds interesting, right? But it’s not as easy as it sounded.
In bank loans, you can take a longer time to repay the loan, along with maintaining a healthy credit score. But that’s certainly not the case with an automobile title loan. Before opting for this loan, it is always a better idea to talk to a professional who can guide you through it.
If you are a small business owner or just an individual, title loans can be a savior in financial crunch situations. Since the approval process is quick, most people tend to opt for it. And you can do that so!
But before making any investment, save this article and implement the aforementioned tips. Doing so can remove any possibilities of risks, and you can easily make the most of car title loans.
With this, it’s the end of this comprehensive guide. But certainly, it is not an end to your learning. Keep following us for such informative content.