Title loans offer car owners a chance to get funds quickly by leveraging the value of their cars. They’re generally available to borrowers of any credit score, and you can often walk out with a loan the same day you apply. Before you get a title loan, though, you should make sure it’s the right loan choice for your needs. This article will cover four questions you should ask yourself before getting a title loan.
1. Do I own my car?
Title lenders generally require borrowers to own their vehicles outright and have no liens on their car titles. So, you first must make sure you pay off your car before you use it to get a title loan. If you paid off your loan already, you’ll need to remove the loan lien through your location’s motor vehicles department or bureau. This process can vary slightly by location and may involve a fee.
2. How much do I need?
Before you get a title loan, you should know the loan amount you need. First, title lenders generally give you 25 to 50% of your vehicle’s value. You must make sure your car is valuable enough to get the loan amount you need. On the other hand, you also don’t want to get too large of a loan. This may cause you to pay more interest and finance charges than necessary.
3. How will I repay this loan?
Title loans typically last from a few weeks to a few months. If you can’t repay the loan in time, the lender can seize your car. So, you should determine how you plan to repay. For example, you may have a paycheck in the middle of the month but need funds now to pay rent. A title loan could be a good option since you’ll have the funds to repay it within a couple of weeks.
4. What is my credit score?
Although it may be tough to find no credit check title loans, there are many lenders with less strict credit score requirements. These lenders will consider factors in addition to your credit score, like your income, employment history, and car’s value.
Still, you should check your credit score. It’ll give you a better idea of your potential approval chances and what amount you might pay in fees. It may also impact how much of your car’s value you can receive.
The bottom line
Title loans can be a good borrowing choice for many car owners, but it’s smart to ask yourself these questions before getting one. For one, you must own your car outright with a lien-free title. A title loan won’t work if you still have a vehicle loan.
If you own the vehicle, determine how much loan you need to ensure your car can get you enough cash, but without overborrowing. Then, make sure you check your credit score and have a plan to repay. Finally, it pays to shop around for title loans, especially online. This can allow you to compare and pick the right option for your situation.