Title loans are loans “secured” by your car. Secured means that you give up your car if you’re unable to pay off the loan. The fact that title loans are secured makes them easier to get (less risk for the lender because they can always repo your car if you miss payments). Title loans also carry lower interest rates than payday loans or cash advances because they’re lower risk.
Find Out If You Qualify:
You can find out if you qualify for a title loan by using online loan sites. Just provide some basic information to find out if you qualify. Typically a lender will want to know a few things. You’ll need to tell them things like the type of car, the age of the car and whether or not is owned or financed.
You need a car that is less than 15 years old. You also need a car that’s still worth something (no $500 junker cars). Most title loans also max out at 25 to 50% of the value of the car but they can go up to $50,000+. Find out quickly if you qualify for a title loan and for how much.
Why You Should Consider A Title Loan:
Title loans can carry lower interest rates than cash advances and payday loans. If you have this type of debt then you may want to use a title loan to consolidate your debt and lower your interest expense and payments. Check to see what interest rate you qualify for. If it’s lower than your payday loan then you’ll save money. But check to see why you qualify for because some title loans can carry interest rates of up to 300%.
Another reason to consider a title loan is when all of your other loan options have been exhausted. Typically a better option is a personal loan (if you qualify) because they have lower interest rates. But if you’ve been rejected for a personal loan then a title loan may be the next best choice.
Watch Outs With Title Loans:
Some of the things you need to watch out for with title loans is that the interest rate can be quite high and defaulting on a title loan means your car gets repo’d. If you need your car to get to/from work then this can be a big risk to take.
Make sure you consider the pro’s and con’s before taking out a title loan. Find out if you qualify for a title loan and then go from there. If you can avoid a title loan it’s the best thing to do. Use our list of 29 Need Money Ideas or 66 Ways To Make Money Online to help you avoid a loan all together.
Photo by NRMA New Cars via Flickr