Major expenses in our lives tend to tie up lots of cash. For example, getting a mortgage requires you to put down anywhere from 3.5% to 20% when buying a home.
It can take years to save up that much cash. To lock it all up has the potential to create additional financial problems in the future.
Luckily, when it comes to home equity, you have multiple ways you can access that cash when you need it, in the form of a home equity loan or line of credit.
But you can do a similar thing with a title loan on your car.
Whether you purchase a car with cash, or you’ve been making monthly payments on it for a few years, lowering your loan balance, you can access some of the equity you have in the car.
Wondering how to get a car title loan? Read on to find out now.
How Does a Title Loan Work?
Car title loans are similar to other collateralized loans. Rather than an unsecured loan, like a credit card, a loan using your car title as collateral.
This means that you, as the borrower, are less likely to walk away from the loan, or you’ll risk losing something of value; your car.
Collateralized loans enjoy lower interest rates than unsecured loans. So it can be a great option when you need cash quickly and don’t want to overpay for a loan. And since the car guarantees your loan, no credit check is necessary.
The current value of your car, along with your monthly income, determines how much you can borrow. But in general, these are smaller loans, often between a few hundred and a few thousand dollars.
It also means that monthly payments will be low. Title loans generally last between 12 and 18 months, since the value of a vehicle can depreciate rather quickly compared to an asset like a house.
Alternatives to a Traditional Title Loan
If you need quick cash using your car title, there are other options as well. If you don’t want to lock yourself into getting a title loan for a year, you can use car title pawns instead.
In Atlanta Georgia, for example, you can get a car title pawn for 30 days. You get the cash you need, continue driving your car, and pay off the pawn in 30 days or less.
All you need for a title pawn is a clear and free title. No credit check, no income verification. The car and a corresponding title are all you need to bring into the pawn office.
Working with smaller title loan companies often provides access to higher loan amounts and more flexible terms than the larger lenders.
Use Your Car to Your Advantage
We all experience short-term financial binds. In those moments, having access to quick cash has the potential to save our future financial situation, rather than crumbling under debt, ruining our credit score, or defaulting on other bills.
A title loan is one of the easiest tools you can use to access short-term cash like this.
Looking for more tips around credit services and loans? Visit our blog now to find other articles.