If you know anything about borrowing money, you know that going to the bank to get a loan can be a frustrating process. Whether or not a financial institution will actually lend you money has a lot to do with your credit history and your credit score. Scores over 720 usually reflect someone with creditworthiness and represents a safer option for lenders. Those with scores under 620 generally represent the highest risk for lenders, and in today’s tightened credit market, conventional loans are nearly impossible to obtain. There are other options, though.
What is a Car Title Loan?
If you own a vehicle that is paid off and is less than 15 years old, you have a great chance of qualifying for a car title loan. The vehicle is used as collateral and a lender, like Embassy Loans of Florida, agrees to lend a sum of money to an individual in return for a fee. If the loan is not repaid, Embassy Loans can take possession of the vehicle and sell it. These loans are typically for smaller dollar amounts in the range of $1,500 to $5,000, but can be for more. Depending upon the lender, the vehicle may not have to be paid off completely either.
Obtaining a car title loan is rather easy. Interested borrowers fill out an application in person or online. When the application is finished and submitted, the lender will require certain documentation. Lenders will need to see identification, proof of residency, and the title to the vehicle. The vehicle identification number (VIN) must match the VIN on the title. Once everything has been verified, the lender will assess the vehicle for its value and the loan is finalized. At Embassy Loans, the typical title loan is processed from beginning to end in an hour.
Your Credit Score
For the most part, your credit score is irrelevant. Since a car title loan is a type of secured loan, there is really no need to check a person’s credit report. Some lenders will, but credit history is not the primary determinant of loan approval. Since many lenders do not need to check credit, a lot of paperwork is eliminated and car title loans are processed much faster than others.
When you pay off a car title loan, your credit score is impacted positively. If you made all of the payments on time and paid off the balance, you will have met your debt requirement. Your credit score will be impacted positively, which will allow to borrow using conventional means in the future.