Borrowing money has become easier for those with bad credit and nowhere else to turn. While it can take days or weeks to see approval with a typical unsecured loan, your chances of getting approved with bad credit are not high. A bad credit title loan can be an effective lending option. These loans are ideal for borrowers with poor credit and equity in their vehicles. Your vehicle’s equity is used as collateral for a loan, which gets you approved with no credit check! Yes, title loans with bad credit have high interest rates, and you must sign over the title to a local lender, but they also give you an option if you need emergency cash.
Your typical online title loan is offered to someone who needs cash quickly. Unfortunately, most borrowers don’t have the money to get a personal loan or credit card advance, so they turn to bad credit title loans. In this scenario, you must provide collateral, a vehicle, SUV, semi truck or anything that can be titled. This will be the lender’s security in case of default.
Most of the time, borrowers are not qualified for other financial options. It works with you carrying your vehicle and associated documents for its ownership. The online lender will then check your car’s condition during an inspection that should take less than 30 minutes. They’ll look for damage or problems that may make the vehicle worth less than the current value. When and if everything is verified, the funds will be released. Indeed, the lender has to keep your car’s pink slip before granting your loan.
The limit of most vehicle equity loans can only reach 50 percent of the cash value of a car or truck. For instance, title loan lenders in Los Angeles, CA, will probably offer less than 50% because there are strict limits on the APR and the amount you can borrow. For that reason, most companies in California will have a minimum loan amount of around $2,500. As a borrower, you will owe the money lent along with interest and other fees. You have a set amount of time to pay back the loan, and you will get the title back after the payment obligations have been completed.
You need to complete certain documents to get a car title loan. When applying for a car title loan, you can get funds by the next business day if you are 18 years or older. Moreover, you must have a driver’s license to prove you are a state resident. Lastly, you must have a car title completely paid off and free of liens or other cosigners. Your vehicle’s title must be in your possession as it must be signed to the lender upon approval.
You will notice that you do not need to present your credit history to get approved with most lending services. That’s the best part about this type of financing, as most companies will not even check your credit score! The verification depends on the vehicle’s value and your proof of income, not your FICO score!
If you are unfamiliar with having a good credit score, you should probably learn why this is beneficial. A good FICO score is often required in applying for other loans, particularly from banks or credit unions. Your approval odds will likely improve if your score is 600 or higher. The score range starts at 300 as the lowest and ends with 850 as the highest. With a high credit score, lenders become more confident in staying current on payments. Bad credit won’t preclude applicants from getting cash for their vehicle. But it’s still imperative to improve credit and payment history. A great resource to learn more about improving credit is the US Government’s site on Credit Issues.
Although your credit rating is not essential in online applying for auto title loans, you can anticipate the lending terms will be pricier than conventional personal loans. This is because a lender is taking on added risk by not doing a full credit check or detailed underwriting of your application. Yes, they can always tap into the equity from your vehicle in the case of default, but repossession is a costly process for everyone, and it’s best to keep current on your payments. Check out the US Government’s page on dealing with debt and improving your credit.
Considering a bad credit car title loan, you can get a $300 to $15,000 equity loan based on your vehicle’s value. Lenders will let you keep driving the car, and you’ll make monthly payments until the amount borrowed is paid back. Another option to consider is how long it will take to get your cash. Most lenders estimate a cash payment within 1-2 business days after underwriting. Some can offer a title loan within hours if you qualify for quick funding. In-store approvals are also available, which may take half an hour, given you have completed the documents. Most direct lenders are aware of people’s unexpected expenses when living paycheck to paycheck.
The bottom line is that you should only apply for a title loan with bad credit if you own the vehicle. That person must also be completely aware of the fees associated with the loan and prepare for the repayment process, especially if it’s an older car. Title loans for older vehicles will often have a lower funding amount and the interest rate may be higher than a typical secured loan.