subject: Title-Loan: Is It Right For You? [print this page] Title-Loan: Is It Right For You? Title-Loan: Is It Right For You?
If you need a loan and you have bad credit, or no credit at all, you may want to consider getting a title loan since lenders for a title loan typically don't even check your credit! You do, however, need your vehicle paid off in full (owning it outright without anymore payments needed) since the title of your vehicle is the asset the lenders will take if you cannot pay back the loan. Since the lenders use the title of the vehicle as an asset, your vehicle must be worth as much as the loan amount, however, lenders will generally not lend out more than around half of what the car could sell for. If they take the car due to your inability to pay back the loan, they will keep whatever extra money they make from selling the car.
Because a credit check is not performed, interest will be high. You can expect to pay anywhere between 36%-65% in interest. Although interest is high, your loan amounts are typically small. So, if you need a loan amount for less than 1,000 dollars, you can easily get that amount through a title loan, but with any other type of loan, it would be difficult to get that small of an amount since lenders usually see that as a waste of their time, especially if you have bad credit, or no credit at all. However, with title loans, you can get a loan for as little as 100 dollars!
Since the loans are smaller amounts, and credit is not checked, even with the high interest rate you are usually expected to pay the loan back after a short period of time. Terms for title loans are typically short, around 30-45 days. Payments can vary, but you are expected to pay off the loan after the term has ended. If you cannot pay back the loan by the end of the term, you can apply for another title loan to pay off your unpaid balances, but each time you do you can expect to pay additional fees and a higher interest rate. There is also a limit on how many times you can reapply for a title loan.
