The answer to that question is up to each individual who takes out a car title loan. As with any form of borrowing, a borrower who does not have set financial goals or a plan to repay the loan can end up with even more problems. Can a car title loan ruin your finances? Only if you let it.
How to Obtain a Car Title Loan
Car title loans are relatively easy to obtain when compared to other more traditional types of borrowing. If you own a vehicle that is relatively new (under 15 years old) that is in good shape, you can qualify. You must possess the title to the vehicle, and it is preferable that the car or truck is paid off entirely. If you have a lot of equity in your vehicle, you can still qualify for a car title loan even if you do have a loan balance remaining. Title loan companies, like Embassy Loans, require a borrower to apply first and then present verifying documentation. Embassy Loans allows applicants to fill out the application online. The application takes just a few minutes to complete.
What about My Credit History?
Unlike traditional bank loans, a car title loan is secured by the title to the vehicle. The loan is not based upon your credit history. Most title loan companies do not even check a borrower’s credit report. The downfall for borrowers is that if they cannot repay the loan, they stand to lose their vehicle. When a borrower defaults, the lender can take possession of the vehicle and then sell it to recover any losses.
Advantages of a Car Title Loan
For those with poor credit, a car title loan is a more likely option when it comes to borrowing. When in an emergency situation, car title loans are great because the processing time is quick. Since there is much less paperwork involved than with traditional loans, car title loans can be completed within a day or two. Waiting for personal loans from a bank can take up to a month or even longer. At Embassy Loans, borrowers who get all of their paperwork in quickly can have access to their money within an hour.
Have a Plan to Repay the Loan
A car title loan should be used wisely. A borrower should have a plan to repay the loan and do so as quickly as possible. Most lenders do not have prepayment penalties meaning borrowers can apply more than just the minimum payment toward paying off the loan. Doing so will help to pay the loan off early and save a borrower a lot in interest payments.