If you’re short on cash and are looking for a source of money, have you considered getting an auto title loan? It can be a convenient way to unlock funds in a hurry to cover an emergency expense.
If you’re wondering ‘what is an auto title loan’, and ‘how can a title loan help me’, read on to learn how they work and why you might want to get one.
What Is an Auto Title Loan?
An auto title loan works in a similar way to a payday loan. You take out a loan for a small sum of money for a short period of time – usually 15-30 days, although in some cases you can get a loan for up to a year.
How to Get a Car Title Loan
To get an auto title loan you hand over your car title to the lender as collateral until you’ve repaid the loan in full. You don’t need to undergo a credit check, so it’s an option if you’ve got a bad credit score and have been unable to get a loan from a bank.
Who qualifies for car title loans? Anyone who is over 18 and owns their car titles may be eligible to take out a loan. Some lenders require that you don’t have any other loans on the car.
How much money can you borrow? The amount depends on the value of the car, but you can generally borrow anything from $100 to $5,000, although in some cases you could get up to $50,000 as well.
Why Apply For a Car Title Loan?
There are several advantages to an auto title loan over other forms of borrowing. Here are five reasons why it might be a good option for you.
1. Get Fast Access to Cash
Car title loans are attractive because they’re fast. You can complete the application process in less than an hour. In some cases, you can even apply online. All you need is to present your identification and car documentation.
2. Cover Emergency Medical Bills
If you’re faced with an unexpected medical expense not covered by insurance, an auto title loan can help. If you need to visit your doctor or a dentist and don’t have enough savings, you can use the loan to make the upfront payment.
3. Fill Income Gaps
Whether you’ve run out of money before payday, or even worse, lost your job, an auto title loan can fill the gap between paychecks. The loan can cover unexpected expenses that come up, or pay for essentials like bills, food, and transportation to work or a job interview.
4. Make Easy Repayments
You can repay the loan in convenient multiple installations, helping you to plan out your finances. This is especially important if you’re getting the loan to cover an emergency expense and need a few days to gather the funds.
5. Avoid Selling Possessions
Rather than having to start selling off your things online or in a garage sale to cover expenses, you can borrow the money against your car. What’s more, the lender doesn’t hold onto your car while you have the loan, so you can continue to use it to get around.
Decide if an Auto Title Loan Is Right for You
While loans that only require car titles as collateral can help you out when you’re strapped for cash, you should be aware of the drawbacks. An auto title loan will have a high interest rate and can cause you to end up in a debt cycle if not managed correctly. If you fail to make your repayments on time your car could be repossessed. If you’re going to use your car as a financial asset, check out our suggestions on how to make it last longer