Pawn vs. Title Loan: Is There a Better Choice?

Borrowers that struggle with a financial situation may look for a loan option that can get them back on their feet. Yet, during that search, many people will find that most loans will only qualify people with good credit. Anyone with a less-than-perfect credit score can find that inconvenient since they wouldn’t get the funds they need for their emergency. But did you know that there are simpler choices? If you apply for a collateral-based loan, like title pawns and title loans, you could get funding without issues. But which one could favor you more?

 

Take a look at what each loan option offers and their differences before deciding which one to apply for. 

Title Pawns

A title pawn is an alternative to traditional loans since they do not require a borrower to have perfect credit to apply for one. With a title pawn, you temporarily pawn your car’s title for cash.

Title pawn lenders will base your loan amount on your vehicle’s value. That means the more your car is worth, the more you can borrow. However, your vehicle could be kept in a storage facility with the title pawn company when you are approved for a title pawn. But once you repay the loan in full, you may receive your car, vehicle title, and keys back.

A title pawn may be the right option if you’re willing to part with your car’s title for a while.

Title Loans

A car title loan is also a way to use your vehicle title as collateral for funding. Like a title pawn, you don’t need perfect credit to receive approval for a title loan. Yet, when you apply for an auto title loan, you can keep your car while you pay off the loan. No need to give up your vehicle as long as you’re on top of your monthly installments.

With a title loan, lenders base your eligibility and loan amount on:

• The Value of Your Vehicle – take into calculation the full equity of the car (title loans for cars not paid off are calculated differently)
• Your Income and Ability to Pay Off the Loan

The more your car is worth, the higher your loan amount will be through an auto title loan. If your income supports a significant loan payment, you may be able to receive a larger loan amount through a title loan than you would through an unsecured loan!

Be aware that a title lender will place a lien on your car’s title until you have paid off the loan. After you complete the repayment process, the lender will remove the lien from the title. However, if you start to miss payments and fail to repay a title loan, lenders can repossess your vehicle and sell it to recover the lost amount. But most title loan lenders prefer to avoid doing that since it can be expensive to arrange a repossession.

After reading about each loan type, you may wonder which works best. While title pawns can be a fast way to get money, some drawbacks are worth considering before applying. As you may have read, title pawn lenders will keep your vehicle during the loan duration, which can be inconvenient if your car serves as your primary source of transportation. Not only that, but most title pawn lenders will only offer short-term loans that can be challenging to repay. Keep in mind that since most title pawns are short-term loans, you could deal with excessive and expensive interest rates.

However, a title loan could offer more benefits than you’d get with a title pawn. For example, title loans could provide you with affordable loan terms that can be simple to pay each month. Additionally, you could keep your car keys throughout the repayment process as long as you’re a responsible borrower! Depending on your title lender, you could also deal with competitive interest rates that can benefit your repayments. What’s even better is that you can get cash in no time! Qualified borrowers could get quick funding as soon as the next business day!

Just think about your financial crisis and what contributes more to that situation. Make sure you talk to lenders from both loan types to learn about them and determine which is better for you. Once you decide, you could call LoanMart and apply for the funds you need for an emergency.