When you need a loan but you have bad credit, there are still options that can help. A car title loan is one of the best ways to borrow money despite a low credit score. You are essentially using your car as collateral. This means that if you are unable to pay back the loan, the lender has the right to permanently take ownership of your vehicle. This is a secured loan, but it comes with a decent amount of risk. It is important to learn all you can about this borrowing option before making a decision either way.
How Car Title Loans Work
In order to obtain a car title loan or any regular same day loan, you must own your vehicle outright. This means that you cannot be currently financing it. If you own the title, you can leverage it to your advantage with the right lender. You will need to speak with a car title loan company to see if you are eligible. You will also be required to fill out and submit an official application.
Can You Get a Car Title Loan with Bad Credit?
One of the best things about these loans is that they don’t require good or even decent credit to get approved. You can have a very low credit score and still acquire a car title loan, but there are other requirements to consider. This is one of the most popular borrowing options for people who have bad credit.
Minimum Requirements
It is important to keep in mind that each lender will have different minimum requirements for lenders. You need to make a point of visiting the lender’s website to get this information before applying. This will help you to save a lot of time and frustration.
Some of the basic requirements of a car title loan include:
- You must be at least 18 years of age.
- You must own your car outright (cannot be financing or leasing).
- You must make enough money to pay back your loan on time.
- You have to be a legal resident of the United States.
- You must have an active checking or savings account.
You should also remember that the overall value of your car is going to play an important role in determining whether or not you can get this sort of loan. The more your car is worth, the better your chances will be of getting approved.
Benefits of Getting a Car Title Loan
There are a lot of benefits associated with getting a car title loan, including:
- High borrowing amounts: You can borrow tens of thousands of dollars, depending on what your car is currently valued at.
- Credit isn’t an issue: People with bad credit can easily get one of these loans, which is part of the reason they are so popular.
- No restrictions: Most lenders won’t even ask any questions about why you want the loan or what you will use the money for.
- Fast cash: If you get approved for a car title loan, you can get the money you need quickly without an unnecessarily long waiting period.
Loan Limits
You can typically borrow up to $50,000, but it depends on the overall value of your vehicle. The lender will determine how much your car is worth based on its make, model, year and current condition. The mileage will also play an important role in how much you will be allowed to borrow. If there is an existing lien on the car, it will likely affect your borrowing potential.
Choosing a Lender
It is important that you take the time to choose a reputable lender for your car title loan, as there are many of them out there. Make sure that you look for an actual car title loan company so that you get the best deal. The longer the lender has been around, the more reputable they are likely to be. Take some time to get quotes from some of these lenders before deciding which one to borrow from. This will help you save money on your loan and get the best overall terms.
The fact is that car title loans have a lot to offer for the average borrower, so you will need to keep this information in mind. It is one of the best options for short-term borrowing, so it is worth at least looking into. You shouldn’t submit too many applications at once, as doing so can harm your credit quite a bit. Instead you will want to prequalify with a few different lenders. This will give you a good idea as to what your chances are for approval, and it won’t negatively impact your score. Lots of people can benefit from these loans, and you could be one of them.
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