The economic downturn has changed the way Americans shop, but it hasn’t slowed commerce as much as we all might have expected. People are still buying homes, cars, and consumer goods to take advantage of low interest rates and snatch up limited product inventory.
But, as many consumers have learned the hard way, liquidating investments isn’t so easy – especially if you need the money fast.
Take a look at 7 unique reasons why borrowers have opted for car collateral loans as an alternative form of financing.
Get Money Without Owning a Residential Property
Fast financing shouldn’t be solely available to those who own a real estate property. Auto title loans provide borrowers without investment properties a way to obtain extra cash flow to start a business, cover household repairs, or handle any other costs they might be faced with.
As with home equity loans, the value of your title loan is directly tied to the current market value of the vehicle you’re using to apply. This means that the more your car is worth, the more you can expect to receive.
Your loan amount will impact the interest amount you’ll expect to pay, but there are grace periods for those who pay the balance within the terms set by the lender.
If you’re trying to save up for a down payment and need to eliminate expensive debt or other immediate expenses, this can be a useful tactic to speed up the process with less stress than other lending options.
Save for the Future
We’re navigating through uncertain times, but life doesn’t slow down for emergencies. Many Americans are still struggling to pay immediate bills and expenses while also planning for their financial future.
Taking out car collateral loans is a great way to get the money you need for major purchases, without touching your retirement or rainy day funds.
For short-term expenses and gaps in your payroll plan, car title loans are an effective way to cover upcoming bills. As long as the balance is paid within the parameters agreed upon between you and your title lender, you won’t incur high interest or fees charged by comparable lending methods.
Get a Larger Lump Sum
If you’re in a bind and need money, there aren’t many options available that can provide upwards of a few hundred dollars immediately. The average title loan is valued at $1,000 but it’s possible to secure thousands of dollars at once with this financing method.
Many auto title lenders can determine the value of your collateral with just a few criteria. They may ask questions about features like:
- Vehicle make, model, and year
- Exterior color
- Interior material
- Entertainment fixtures
- Recent repairs
Additionally, be prepared to show photos (or video, in some cases) to verify the condition of the vehicle. Since social distancing measures have limited the ability for appraisers to physically check the vehicle upon pickup, this is a way to provide documentation safely and easily for both parties.
For those who are handling personal or unique expenses and need to pay in cash, this method is easy and accessible for anyone who is able to provide proof of value and ownership.
Keep Your Collateral
One main reason why people opt for car title loans instead of comparable pawns is the fact that borrowers are able to maintain the use of their car, even after they’ve received the funds.
Auto title loans use the value of the borrower’s car to determine the loan amount, but lenders allow consumers to keep their cars during the repayment period.
In a sense, the only physical asset being transferred between the lender and borrower is the actual pink slip upon application. Unless the owner falls delinquent on the loan, there is no risk to the collateral itself and the consumer and continues driving as usual.
For those who are still commuting during this time or one-vehicle households, this lending method won’t disrupt the borrowers’ lifestyles while providing the funds they need.
Skip the Credit Check
Title loans are qualified based on the value of the borrower’s collateral and their projected ability to pay back the balance in a timely manner. As a result, most title lenders don’t require a credit check as part of the approval process.
Eliminating the need for a credit check can help borrowers protect the integrity of their score, since no hard inquiries will be added to the account. Additionally, those with less-than-favorable credit can still obtain affordable financing without the need for a sparkling report.
Traditional bank loans have strict application requirements, and credit card withdrawals are often expensive and come with a laundry list of limitations.
Choosing a car collateral loan over comparable methods can help you secure the cash necessary for lifestyle projects like:
- Home improvements
- Car repairs
- Auto upgrades
- Buying a property
- Investment management
- Getting out of debt
- Tackling student loans
In some cases, auto title loans can even be taken out to reduce higher-interest debt that is just accumulating over time.
Get the Money Quickly
No matter what milestone you’re trying to achieve in 2021, getting a car title loan can help you meet your goals in no time at all.
With online instant rate calculators, potential borrowers can get preapproved in minutes. Thanks to social distancing measures established during the pandemic, the entire verification process can take place remotely.
While those who have been recently laid off might have access to their 401K accounts, withdrawing funds to cover bills can be expensive and detrimental to future security. Many emergencies don’t qualify for penalty-free withdrawals from most investment accounts, and home equity loans can take weeks to disburse.
With an auto title loan from an online lender, it’s possible to get thousands of dollars in just a few hours.
Refinance Existing Loans
Federal rates are still lower than previous decades, and more borrowers are jumping on the bandwagon to save money over the lifetime of their auto or title loans.
Refinancing your existing loan can help you save hundreds to thousands by the time you pay off the final balance.
Additionally, refinancing sooner rather than later can help you keep cash in your pocket now. Refinancing is a great way to reduce your monthly payment, while also seeing what additional benefits and discounts you can quality for.
Now is the time to take advantage of rock-bottom rates and lenient lending policies set by the ongoing pandemic. Car title loans are exceptionally effective for borrowers who are in need of a few hundred, or thousand, dollars fast. Ultimately, this is one of the most user-friendly and accessible paths on the market for borrowers who are in immediate need of liquid cash.
Car collateral loans are one of the fastest and most accessible lending options for borrowers who need liquid cash. If you don’t want to apply with the stringent requirements held by banks and public institutions, these are just a few reasons why you should consider this alternative financing method.