Title Loan Vs. Title Pawn: Which One Benefits You Most?

Which Loan Benefits You Most: Title Loan vs. Title Pawn

If you need money quickly for an unexpected expense, you might start looking into online loan options like a title loan or title pawn. Both title loans and title pawns use your vehicle’s title as collateral for a short-term loan. While these two types of short-term, secured loans may seem similar, there are some key differences. Understanding the differences between the two can help you make an informed decision about which option is right for you. Here is a guide to determining which loan benefits you most: title loan vs. title pawn.

What Is a Title Pawn vs. Title Loan?

Both title loans and title pawns can provide you with money quickly when you need it for an unexpected expense. However, the requirements, application, and funding processes for each type of loan are different. Let’s take a look at the key differences between a title loan vs. title pawn. Having all of the information you need can help you choose the right option for you and save you time and money:

• Title Loans – When you get a title loan, you can keep and drive your vehicle during the loan repayment period. If you default on your loan, the lender can repossess your vehicle. In order to obtain a title loan, you typically need to prove that you own your vehicle or are close to owning your vehicle, that the title is clean and lien-free, that you have reliable income, that you have a permanent residence, and that your vehicle is in good condition. You will need to provide identity documents, but you likely won’t need to undergo a credit check. Your loan amount will usually be between 25-50% of the value of your vehicle. Your loan repayment period may be 15-30 months, but there is usually no penalty for early repayment.
• Title Pawns – When you get a vehicle title pawn loan, your vehicle will be held by the lender during the loan repayment period. If you default on your loan, they may sell your vehicle at auction. When your loan is completely repaid, you will get your vehicle back. There are typically fewer requirements for a title pawn, and you may not need to provide proof of income or residence. The amount of your loan will depend on the value of your vehicle, and your loan repayment period could be up to six months.

Pros and Cons of Title Pawn Loans

Like any type of short-term or online loan, both title pawn loans and car title loans have their pros and cons. Let’s first take a look at the pros and cons of a vehicle title pawn:

• Pros of a Title Pawn – The biggest advantage of a title pawn is that you can get money quickly, even if you have bad credit or no credit. You won’t need to provide much documentation, and the process can often be completed online.
• Cons of a Title Pawn – The biggest disadvantage of a title pawn is that you won’t be able to use your vehicle during the loan repayment period. If you default on your loan, your vehicle may be sold at auction. The interest rates for title pawns are also very high. If you are applying online, the funding process may take longer because you will need to wait for a representative of the lender to appraise and value your vehicle and then move it to their secure storage facility.

Pros and Cons of Car Title Loans

A car title loan also has pros and cons. Understanding the risks and benefits of both types of title loans can help you make the best decision for your needs, especially if you’re facing hardship and need a no-credit or bad-credit loan option. Here is a look at the pros and cons of a title loan:

• Pros of a Title Loan – The biggest advantage of a title loan is that you can get the money you need quickly, sometimes within hours or on the same day. While your car will become collateral, you can still use it during the loan period. Your vehicle’s value will determine the amount of your loan, so even if you have bad credit or no credit, you could still qualify for a loan.
• Cons of a Title Loan – The biggest disadvantage of a title loan is that you risk losing your vehicle. If you don’t meet the repayment terms, your vehicle might be repossessed and you may not be able to get it back. Title loans also often have short repayment periods and high interest.

Factors to Consider When Choosing Between Title Loan vs. Title Pawn

How do you choose between a vehicle title loan and a title pawn loan? It’s important to consider a wide range of factors so that you don’t enter into a loan agreement without knowing what to expect:

• Loan Requirements – While all lenders are different, most title loan companies require proof of identity, income, and residence. They will also need proof that your name is the only one on the title, that your vehicle is paid off or almost paid off, that the title is clean and lien-free, and that your vehicle is in good condition. They likely won’t do a credit check, and they may offer title loans for people with bad credit or no credit. A title pawn company may not require as much documentation and may have looser requirements regarding your income and residence.
• Interest and Repayment Period – Title pawns usually have much higher interest but a longer repayment period. A title loan may charge less in interest but may require you to repay the loan within 15-30 days.
• Loan Amount – Both types of loans determine your loan amount based on the value of your vehicle.
• Consequences of Default – Both types of loans will repossess and/or auction your vehicle if you default on your loan.
• How Often You Use Your Vehicle – Because a title pawn requires you to surrender your vehicle to the lender for the loan repayment period, it isn’t a good option for anyone who uses their vehicle every day. A title loan allows you to keep your vehicle and use it to get to work, school, and other places.
• How Quickly You Can Pay Back Your Loan – If you believe you can pay your loan back within a month, a title loan may be a better choice. If you think you need four to six months to repay your loan, you might be better off with a title pawn.
• What You Will Do if You Can’t Make a Payment – Finally, consider what you will do if you can’t make a payment. While all lenders have different options for late or missed payments, you may end up losing your vehicle if you default. Choosing a short-term loan with lower interest that allows you to keep your vehicle so that you can use it for work may be a good option if you are worried about whether you can repay your loan on time.

Contact VIP Title Loans to Learn More

At VIP Title Loans, we want you to have all of the facts and information you need to be able to make an informed decision about which type of title loan is right for you. While both title loans and title pawns use the value of your vehicle to determine your loan amount and require your vehicle as collateral, there are key differences. If you use your vehicle every day to get to work, school, or take care of your children, a title pawn is not a logical choice, as you won’t have access to your vehicle during the loan repayment process. Giving up your vehicle could cause further hardship and affect your ability to work or earn money, making it harder for you to repay your loan. If you opt for a title loan, you can keep your vehicle. Though the repayment period may be shorter, you may have lower interest and a better chance of repaying your loan on time or early.

We make the process of applying for a title pawn or car title loan online as quick and easy as possible. We want to help you get the money you need as soon as you can so that you won’t face further hardship or financial problems. Our car title loans offer between 25-50% of the value of your vehicle, and you’ll sign your title over to us rather than relinquishing your entire vehicle. Our title pawns offer low interest rates, reasonable fees, and extended repayment periods. We can fund your loan online in a matter of hours or days. Click here to apply for a title loan or title pawn in Arlington, Dallas, Garland, Hickory Creek, Colleyville, or Richardson, TX. You can also visit one of our five locations to get started.