Car title loans can be a real financial blessing if you are facing a medical emergency,
unforeseen expense, or simply struggling to makes ends meet. It can be a way for you to get
fast money regardless of your credit score or financial situation, all you need to do is have a car
with a lien-free car title. That doesn’t mean it’s all sunshine and rainbows, though. While there
are a lot of pros to car title loans, there are certainly some cons as well.
Let’s break them down together:
- Car title loans are fast! Like, really fast. Perhaps the fastest loans, from start to finish,
on the market. If you apply online, you can expect to have your loan within a bank
account of your choosing within 24 hours of the time that you apply. If that isn’t fast
enough for you, simply head to an in-store car title lender. They can typically get your
cash in hand within an hour.
- No Credit check is necessary for the typical car title loan. That means that you won’t
be punished for past financial mistakes. Car title loans are one of the few common types
of loans that don’t check customer’s credits, so if you have bad credit, it is definitely an
option to consider.
- You get to hold onto your car while you pay off your loan. That’s right, the only thing
your lender will hold on to is your car title. Once you pay off your loan in full, plus an
interest and added fees you accrue over the life of your loan, you’ll get your title back.
- Because car title loans are secured loans that can be obtained with no credit check , you can expect to face
relatively high interest rates. Many car title loans are known to hold interest rates as
high as 25 percent. That means that if you take out a $1,000 car title loan, you will have
to ultimately pay back at least $1,250. If that kind of fee isn’t worth it to you, you may
want to look elsewhere.
- You run the risk of getting your car repossessed. This is obviously the biggest and
most impactful potential negative outcome of car title loans. Car title loans are secured
loans tied to the value of your car. That means that if you are unable to pay back or
default on your loan, your lender has the option to repossess your car and sell it in order
to make up for the money they lost lending to you. There are ways that you can actually
buy back your car, but considering your financial situation, that may be pretty
impossible. Because of this potential outcome of car title loans, you have to really
consider whether or not you think you’ll be able to pay back your car title loan within
your payment term. If you think the answer to that question may be no, it is probably
wise to steer clear of car title loans altogether. For title loans on all types of cars, new
and used, including classic cars, you can search for different lenders here .