When you need to borrow money, there are a few alternatives. You could turn to your family and friends, but many times they are struggling as much as you are to meet their financial obligations. There are traditional bank loans and then there are other types of short-term loans like a car title loan. Most people probably do not understand the difference between the two. While similar, they do have their differences.
A traditional bank loan can be acquired by going to a financial institution – bank or credit union – and filling out an application and then providing all of the requested documentation that is needed to process the loan. Typically, a borrower will be asked for things such as employment history, credit history, and other background information. The lending institution will then begin a lengthy process of examining the credit worthiness of the borrower. This can take weeks. Eventually, the lender will make a decision as to whether to loan the money or not. That decision is based on the ability of the borrower to repay the loan.
A car title loan is a little different. A potential borrower can fill out an application to start the process. Many title loan companies, Embassy Loans of Florida for example, offer the ability to fill out the application online or at one of their several locations around the state. Borrowers are asked to verify their identity and residency. They will provide a photo ID and something like a utility bill, in addition to the title of the vehicle. The next step is to make sure the title matches the car or truck and then assess its value. Once the title loan company has an approximate value for the vehicle, they can finish processing the loan.
This entire process normally takes just an hour. There are no credit checks or employment verifications necessary. Since the vehicle is offered as collateral, there is no need for all of the paperwork involved with processing a conventional loan. The lender holds the title to the vehicle and if the borrower does not repay the loan, the lender becomes the owner of the car or truck. The loan is not based on the borrower’s ability to repay.
Another big difference between traditional loans and car title loans is the amount of money borrowed. A car title loan is usually taken out for somewhere between $5,000 and $7,500. Bank loans are usually much higher. A vehicle title loan is great option for someone who doesn’t have a great credit history and who need cash fast.