A car title loan is a type of loan secured against the owner’s vehicle. The lender keeps the title until the agreed amount is paid back. To help you decide if this loan is for you, here are the pros and cons.
Pros:
No credit checks – car title loans are designed for borrowers with poor credit history, thus lenders don’t need to run credit checks and the loan will not appear on your credit report.
Simple requirements – only a few documents and IDs are requested along with your vehicle’s title. You can even apply for car title loans online.
Quick cash – because there aren’t many requirements and procedures involved, you can get your cash in as little as 24 hours. If you’re dealing with a financial emergency and can’t wait days for approval, car title loans are a great option.
You can borrow quite a large sum of cash – unlike payday loans, car title loans can grant you a larger amount of money, depending on your vehicle’s value. The amount can be anywhere between 25% and 50%.
Cons:
High interest – this is a common issue with loans of this type. Car title loans have interest rates that can go as high as 300% APR, although some states have lower APR limits. As with any other loan, only borrow an amount that you’re comfortable paying off.
You could lose your vehicle – because of the high risk the creditor is taking for lending out to someone with bad credit, this type of loan is backed by collateral. If you default on your payments, the lender can seize your vehicle and sell it to recover the costs of the loan.
Sometimes you may be thrown into a situation where your only option is to secure a loan against your vehicle. Whatever it may be, it pays to learn everything about car title loans. More information about them can be found online at Hyperlend.
