Car Title Loans

Mainstream lenders scrutinize every loan application properly and meticulously. One of their judging points is whether you have a pretty credit score or not. If you don’t, you pretty much lose the chance of getting that loan. Or you might get the loan, but the amount will be lower and the interest is higher.

Over the years, mainstream lenders have always been the obvious choice when people are seeking out loans. But when banks and financing institutions imposed tighter criteria for loan approval, one that includes good credit score, bad credit borrowers were taken out of the picture.

Title Loans – Alternatives for Mainstream Loans

Soon enough, third-party and private lenders hatched up various kinds of loans to cater to people with poor credit scores, and these include title loans.
Car title loans are secured loans that are available for sub-prime borrowers. As secured loans, car title loans typically require the car title as collateral. What you need to do to get this loan is to simply bring the car to the lender and have it appraised. You’ll also need to present the clear title, your driver’s license, spare keys and other basic documentation. After which, you and the lender will agree on the loan amount, loan term and other conditions associated with the loan.

If you’re still concerned about your credit score, you must also take note that a lot of car title loans lenders no longer conduct traditional credit check. Lenders are not as concerned about your credit history and standing. What they care the most is that the car is in good condition, it is paid off and you have the documents to show that you are financially capable of paying the loan off.

Title loans are good alternative to mainstream loans especially if you need the loan right away. Mainstream lenders are known to have long loan processing periods which do not help if you urgently need the money. Meanwhile, car title loans are processed and approved in just a few minutes as long as you prepare all the requirements beforehand.

Furthermore, those who have poor credit score will find car title loans beneficial. You don’t have to worry about your credit score getting in the way of obtaining the funding you need.

But, Is There a Catch?

Yes, there is and all types of loans have a catch. You have to be careful about the amount, loan term and your payments. In as much as possible, get a title loan that you can manage, in an amount that you can afford and the loan term that best suits your financial goals. If you become delinquent, or worse, default on your loan, the lender will have the legal right to seize your car. And in order to recoup the uncollected payments from you, the lender could put the car up in auction and own the proceeds.

Having good financial management skills will help ensure that you’ll meet the payments on time and that you’ll get your title back with no problem.