Car Title Loan: 5 Things To Consider Before Getting One
The number of people taking out car title loans has tripled in Canada during the COVID19 pandemic and accompanying recession.
A car title loan is an easy and fast way to get a loan if you have no credit or a low credit score. With a car title loan, you’ll use your car as collateral, and your credit score, or lack thereof, won’t be taken into account. In effect, you can get a loan with your car.
We’ll go over a few things to consider in this blog post before you get a title loan.
Read on for more information to help you decide if a car title loan is right for you.
What Is a Car Title Loan?
Before we go into the things to consider before taking out a car title loan, we should explain what exactly a car title loan is. Some people confuse them with car loans, thinking a car title loan is what you take out to purchase a car. Instead, a car title loan is an alternate way of taking out a loan.
As we explained in the intro, a car title loan is a loan in which your car is used as collateral or equity. This works well for people who need cash quickly, and either have no credit or bad credit. With your car as collateral, there is no need to go through the painful process of dealing with banks and other scutinizing lenders, but rather simply unlock the equity in your vehicle with a friendly and knowledgeable title loan lender. It creates mutual respect between the borrower and lender, where you have the lender’s money and they have a lien registered againt your vehicle.
Now, let’s get into a few things to consider before you take out a car title loan.
1. What Is the Interest Rate?
Car title loans can have sometimes can have high-interest rates on the cash advance, depending on who you choose to go with. You’ll need to have a look at all of the particulars before you take out a title loan, and the interest rate is one thing you need to pay close attention to. Don’t gloss over it because you’re close to getting some cash. Ensure the interest rate is a fair one that you can feel comfortable with before signing over your car title.
2. Can You Pay It Back On Time?
Only once you’ve paid back your car title loan will you be able to have the title loan company immediately remove the lien registered against your vehicle. Make sure you make enough money or plan to make enough to make your regular payments, or you have a plan to pay back the loan on time. Many title loan lenders will defer payments to assist you and even extend the length of the loan to reduce monthly payments if there is a need.
3. Do You Own Your Car Outright?
Unfortunately, if you’re still paying your car off, or it is leased, you can’t take out a car title loan. You’ll have to have no outstanding debt on your car, and your car can’t be more than 9 years old in most cases. If neither fits the bill, you likely won’t be approved for a car title loan. If a small balance is owed on your vehicle through financing, then there are times that the title loan lender will pay off this balance and add it to the loan.
Additional requirements often include the car being fully insured and having all of the registration papers needed to show you own your car. If your vehicle is in your company’s name it is still possible to get a title loan using it, however, you must be able to prove that you own the company that owns your vehicle.
4. How Much Can You Get for a Car Title Loan?
You can actually take out as little as $1,000 on a car title loan, which is a great option if you need a small amount of money fast, such as before payday. Overall, the average maximum amount of money you can get for a car title loan is about 50% of your car’s overall wholesale value. For some cars, it’s not that much, and for others, that could be quite substantial.
Your car’s value is not what you originally paid for the car when you purchased it. Instead, the car’s value is the amount of money the car would be worth if you decided to sell it immediately through wholesale, not retail.
It is definitely worth it to consider if this is enough money for what you need.
5. Ask the Lender If This Loan Will Help Your Credit Score
If you have poor credit, a car title loan can help your credit score in some cases. It depends on whether or not the lender reports the payments to either, or both, Canadian credit bureaus. They do not have to do so with other types of loans, so keep that in mind when you take out your title loan.
If you want to raise your credit score, you’ll need to discuss it with the lender first, and then you can decide if you’d like to take out a loan.
Get a Loan with Your Car
A car title loan can be a quick and convenient way to earn a little bit of extra cash when you’re strapped for it and don’t have good enough credit to take out a loan. However, you do need to be sure that repayment conditions are those you feel comfortable with and payments that you can realistically make.
If you’re interested in taking out a car title loan, call us now at 1-877-346-2274. You can get same-day approval for a car title loan in Ontario. We don’t perform credit checks, and you don’t need a job.
Apply now to get up to $25,000 nearly instantly.