If you are looking for a loan but you are unlikely to be approved by a bank or credit card provider due to poor credit history, then an option that you could consider is a car title loan.
What Is A Car Title Loan?
A car title loan is a secured loan, which means that the money is loaned to you on the basis that you put a possession up as collateral, in this case, your car. If you fail to make your loan repayments then the lender is able to take possession of your car in order to cover the loan amount.
Secured loans like car title loans are more likely to be approved than unsecured loans like bank loans or credit cards because the risk to the lender is lower. Borrowers who have leveraged their possessions in order to take out a loan are generally more motivated to make repayments, so these types of loans are a lower risk to lenders. Because of this, they are more likely to grant them to people with low credit scores.
When you take out a car title loan, the title deed of your car is transferred to the lender for the duration of the loan period. You still keep the car and you can drive it, but it will be taken from you if you don’t make the loan repayments, which is worth considering before taking one out. Many people would struggle to do things like getting to work without a car.
In general, loan terms for car title loans are quite short and the amount you can borrow won’t exceed over half of the value of the car.
Which States Allow Car Title Loans …
Car loans are not allowed in all states, so if you want to look into this as an option, it’s important to make sure that they are allowed where you live.
The states that allow car title loans are: Alabama, Arizona, Delaware, Georgia, Idaho, Illinois, Texas, Mississippi, Missouri, Nevada, New Mexico, South Dakota, Tennessee, Utah, Virginia, and Wisconsin.
You can also get car title loans in California, South Carolina, Kansas and Louisiana, but the amount of money that you can borrow is capped.
How You Can Get A Car Title Loan
The way that you get a car title loan can differ from state to state, so it’s worth reading up on the process in the state that you are living in. More on rapid cash title loans Rio Rancho, NM can be learned here. In general, you will need to own the car outright – you can’t borrow against a car that you are still paying off unless you are in the last few months of payments.
The title deed for the car will need to be in your name, and you will need some type of income in order to qualify. This doesn’t necessarily have to be full-time work, but you do need to demonstrate that you are bringing in enough money to make the loan repayments.