Are you afraid due to your bad credit score? Don’t worry, as loan agencies can often disburse title loans with bad credit to their borrowers.
Among the different types of title loans, such as boat title loans, auto title loans, and motorcycle title loans, are you wondering about the most common type? Let’s see the best title loan type.
Title Loans are deemed the most expensive type of loan because they demand collateral against your vehicle. They often disburse quick cash to borrowers between $100 and $10,000. Several title loans are available on the market, and these are secured loans. It means the lenders will confiscate your property if you can’t pay. Understandably, getting stuck with financial challenges could be a severe problem, but everyone has to deal with such situations.
Title Loans: Definition
These loans let the borrowers use the car’s title as collateral. In order to obtain a title loan through a loan service platform, it’s imperative to sign over your title to the lender and reclaim it until they reimburse the cash entirely. You can be eligible for a title loan only when:
- You own a car.
- You’re 18 or older.
- You possess a lien-free vehicle title.
- You have a steady income source.
Essential Documents for Title Loans
Documents for obtaining a title loan differ from one state to another. Therefore, the lists of documents that are needed by most states are the following:
- Income proof, vehicle insurance, and permanent residence.
- Real vehicle title displaying sole ownership.
- Recent evidence of vehicle registration.
- A legit government-issued ID.
What Are the Leading Types of Title Loans?
Title loans are of three different types:
Boat Title Loan
A boat title loan is set up on your boat or watercraft’s equity, implying the lenders utilize your boat as collateral. You should allow an online lender to obtain a boat title loan to put a lien on your boat title. After that, the lien will be eliminated when you successfully repay the loan.
Auto Title Loan
The total amount you can withdraw from an auto title loan depends on the vehicle’s value. If you possess a jalopy, you can’t obtain a whopping amount from an auto title loan. But do you have a modern and brand-new car worth a few thousand dollars? If so, you will surely get some additional cash.
Motorcycle Title Loan
It’s one type of secured loan that utilizes motorcycles as collateral. You must confirm that you have ownership of this motorcycle in order to obtain a motorcycle title loan. It must be in top-notch working condition! The value of your motorcycle is dependent on getting loan approval.
The Most Common Type of Title Loan
Among these three title loans, the auto title loan is one of the most common and easily obtainable. It’s accurately designed for people who need instant cash to cover significant financial obligations, get by in an emergency, or cope with debt.
If you have a car and want to earn money while putting this as collateral, it would be the fastest auto loan that can be obtained instantly. But before availing of this common type of loan, consider these three things:
Car title loans possess high-interest and high fees
It’s not uncommon for online lenders with auto title loans to charge approximately 25% of the entire loan amount every month to subsidize the loan.
For instance, if you get a 30-day auto title loan for $1000 and the charge is 30%, i.e., $300, you will need to pay $1300 along with the additional costs to reimburse your loan at the month’s end. It translates into an APR of over 300%, which is much higher than other types of credit and credit cards.
You may lose your car if you can’t reimburse a car title loan
If you owe a $500 loan with a $125 additional fee, you can pay it off entirely at the end of the 30-day term. You need to disburse the $125 fee and convert the $500 balance with a 25% charge into a brand-new loan.
It means you will need to pay $250 on the $500 borrowed, and if you keep rolling over the loan, you might end up in a cycle of extra fees, which makes it challenging to reimburse the online lender.
A car title loan is the most common type of title loan, and it is also the most expensive loan type to consider. With car title loans, you can obtain quick cash even if you have bad credit, which lets you qualify easily.