You probably already know what a home equity loan is. It allows you to use the value of your home, which you’ve already paid for to get money on loan. Likewise, you are familiar with payday loans and cash advances as they are simple forms of a short term loan. But you may not fully understand how title loans work or how they can provide the same benefits for your car. You can tap into the value of your car to get a loan.
Unfortunately, only a handful of people can benefit from a car title loan because many don’t even apply. We have debunked 4 of the most common myths to let you to enjoy the benefits you can get from a car title loan.
Myth #1: You Need a Good Credit Score
You do not need to have a good credit score in order to qualify for a car loan. In fact, some companies won’t even bother to check the credit score of borrowers. This is because your car may qualify for a loan by acting as the collateral. The loan amount you get will depend on the equity of your car and other underwriting factors. If you fail to repay the loan, your car will be repossessed by the lender and sold to pay for the money you owe. As there is little risk for the lender of an auto title loan, the approval criteria are not as stringent. Here in the Southeast you have different criteria to follow and understand based on the state you live in. If you check out our online car title loans application you’ll see there are various types of questions asked to determine how much money you can borrow.
Myth #2: You Can’t Pay Off the Loan Early
We have heard this for way too long from our Southeast Title Loans customers. There are no penalties for paying off your title loan early. Many lenders here in the Southeast would rather be happy to close out a loan early. As a matter of fact, some companies provide debt counseling sessions to borrowers where they hire experts to share tips to pay off loan debt before the given term. Usually, it’s easier when getting a windfall. Clearing up a massive chunk of loan debt is easier when getting a work bonus or a big tax return. You can even pay off the entire amount if you wish. Alternatively, you can also pay a little extra every month.
Myth #3: You Can’t Drive Your Car Until You Pay Off
We can see how this can be confusing. You’re supposed to hand over your car title in order to take the loan. However, the last thing a lender wants to do is keep your car. Imagine the kind of space they will need if they were to store every borrower’s car. It just doesn’t make sense. If we have to take the car after giving you the money, how are you even going to handle the emergency? You risk losing your car only if you default on your payment. That, however, is what all title loan lenders try their best to avoid so much so that many companies are starting to offer debt counselors to help borrowers pay back their dues faster. The target is to encourage repayment and avoid repossession. Each state has certain restrictions and rules when it comes to repossessions. For example, Florida has specific regulations in place which limit what a company can do when it wants to repossess your vehicle for lack of payment.
Myth #4: You Can Get a Car Title Loan in Any State
As car loans are easily available in most major states in the country, it has led many to believe that it is available in all the states. The same can be said for mortgage loans and even some types of installment loans. You are able to use your house as collateral or take out an unsecured cash advance in most states. Unfortunately, that is not the case with online car title loans, especially Southeast states like West Virginia and Arkansas. There are movements underway to expand the service to other states. People sometimes need quick access to emergency funding even with bad credit or with no source of income. States like Florida and Texas have hundreds, maybe even thousands of local companies that provide 24 hour vehicle equity funding. Take the city of Miami for example. You can drive through most neighborhoods and see a local title pawn company that provides funding in person or online. You simply, need to know where to look!
A breakdown of states that have legalized car title loans are:
- New Mexico
- New Hampshire
- South Carolina
- South Dakota