Ironically, it is often when you need money the most that you are least able to get it. If you have run into a financial challenge, but your credit is not good, you might be worried that there is no way you can get a loan.
With a traditional bank, that might be true, because banks require a good credit score, which can make it difficult to get a loan if your credit is not up to par. Fortunately, we have some good news for you. With a title loan, bad credit is not a problem.
Secured vs. Unsecured Loans
What is the difference between a bank loan and a title loan? To understand, you need to understand the difference between secured and unsecured loans. An unsecured loan, like a bank loan, is given on the basis of your creditworthiness. A secured loan, on the other hand, is tied to something you own. You put up something as collateral, and the lender extends credit to you. A car title loan is a secured loan, and you put up your automobile title as collateral for the loan. As long as there is no lien on your title, and your vehicle has value, you can borrow money, even with bad credit.
Title loan lenders don’t typically worry about your credit score or credit history, because they have the value of your car to cover a potential default. What they do require, however, is a steady income stream. You need to show that you have a source of income, so that the lender will know you can repay your debt.
Pros and Cons of Title Loans
Title loans can be a good option if you have bad credit, but all title loans are not the same. There are many advantages to title loans, including the speed at which you can receive the money. You can quickly borrow an amount based on a percentage of your car’s value, typically 25 to 50%, the application is easy, and you can often receive your funds the same day. The lender will need to inspect the car, to make sure you are not overstating its value. Usually, you can get more money from a title loan than you could from a cash advance or payday loan, and because the lender holds onto your lien, you can continue to drive your car.
There are disadvantages to title loans, however. While title loan lenders don’t check your credit score, they also do not report on-time payments to the credit bureaus, so repaying a title loan will not help improve your credit. What’s more, making your payments may be more difficult than you anticipated when you took out the loan, because they come due quickly, usually for 15 or 30 days. After your loan term expires, you will have the option to roll over your loan, but car title lenders often charge hefty finance fees- up to 300 percent APR. There may be additional fees as well, like processing, document, and loan origination fees. When you roll over your loan, your loan is renewed and becomes a new loan, with added interest and fees. This can lead to a vicious cycle of increasing debt.
When You Need a Title Loan, Trust VIP Title Loans
Fortunately, as stated before, all title loans are not the same. At VIP Title Loans we offer the best rates in the industry, and if you compare us to other title lenders, you can verify that this is factual. We understand that getting the best title loan interest rate is important to you, and we value your dollar. That’s why we our rates are manageable, and our fees are lower than most other companies. We want to earn your business by saving you money, and with locations in Arlington, Dallas, Garland, Hickory Creek/Denton, and Richardson, we’re easy to find. Call us at 214-819-9491 or 682-325-4202, or contact us for more information.