When Is It Time to Get a Title Loan? 4 Questions to Ask Yourself
Are you thinking about getting a title loan but aren't sure if it's a good idea for your situation? A title loan is simply a personal loan that is attached to the value of physical property, such as a car or a motor home. Here are a few questions you can ask yourself to determine whether a title loan is the best option for you.
1. How Much Money Can You Save Through a Title Loan?
Many people don't think about how much money a loan can actually save them. If you're late on bills and need to pay things now, then a title loan could potentially save you from:
- The cost of a late rental payment
- Late fees and deposits for disconnected utility accounts
- Taking time off work to get accounts reconnected or negotiate with creditors
- Higher interest rates due to missed payments and lowered credit scores
What are the consequences of missing a payment? It's likely that those financial consequences greatly exceed the amount that a title loan would cost.
2. Do You Have Equity in Property?
Title loans are based around property that you own. If you have a $4,000 loan out on a $10,000 car, then you have $6,000 of equity to borrow against. And it isn't just cars that you can use a title loan with. You can use anything that has a title, especially if you own it outright, like ATVs, motorcycles, motor homes.
You do need to have substantial equity in your property. So if you owe more on a car than its Blue Book Value, you may need to use a different type of property. Even though a loan will be taken out against the title of your vehicle, you'll still be able to use your vehicle.
3. Do You Have Bad Credit or No Credit?
Many people either have bad credit or simply haven't established a credit history at all. This makes it all but impossible to get a personal loan or credit cards, especially not in time to make up for financial emergencies.
Title loans do not require a high credit score. This is because title loans are secured with the value of your property, rather than your individual creditworthiness. For those who need a loan now, this is often the only option.
4. Do You Need to Make Up for a Shortfall?
Every once in a while, you simply encounter a financial shortfall. Perhaps you just need to make it to your next paycheck and you'll be fine. In these situations, a title loan is one of the most useful types of loan. You can get cash now to make up for your financial shortfall, and you can pay it back with your next paycheck.
A title loan is going to provide more money than a payday loan and will also have lower interest rates and fees. If you can pay it back quickly, you will pay very little in interest. That means that you'll be able to resolve your temporary financial shortfall very quickly, with as little damage as possible to your budget.
Title loans are also an excellent tool for short-term financial emergencies, such as medical issues, emergency room visits, car problems, and vet bills. Like a payday loan, you get cash now, rather than having to go through a lengthy application process.
Still not certain? In general, if you need a personal loan and have equity to spare, a title loan is a convenient and fast way to get cash now. But because everyone's individual situation is unique, you might want to do a little more research. The financial experts at Tennessee Title Loan can help.