Would a traditional loan or a car title loan be more helpful to financial troubles? I suppose it would be based on your financial state at the moment and what you need the money for. Often times, a car title loan is used for emergency reasons since the loan is secured by the title to the car. People who do not qualify for conventional loans will end up looking for other options like a car title loan.Everyone’s situation or financial circumstances are quite different, but there are general reasons why an individual would take out a secured car title loan. How can your financial situation run the course if there were emergency costs piling up and really needed to be paid right away?
You should take out a car title loan when;
- You don’t have any or enough available balance to help you out.
- Your credit score is too low to apply for new credit.
- You have no savings account.
- Your bank won’t help me due to your score.
When any of these statements are true, there is a chance that a car title loan may be on the horizon. Of course, there is one major challenge to sort out in order to have this financial opportunity available, you have to own the car title. A clear car title is what makes this loan option a quick transaction.
Pursuing a traditional loan at a bank is a guaranteed search into your credit report. Banks and credit unions will look into your credit history for any information they may likely consider risky. Late or missed payments, repossessions or debt in collections are a few examples of reasons to not lend money to an individual. When the negative marks are a few years old or not damaging enough for a full blown “No”, the financial institution may ask for a guarantor for the money. The guarantor is a co-signer with good credit to sign for the loan as well. This is a second chance option for the lender to collect the loan if the one applying fails to make payments.
If a traditional loan is the option which best fits your situation, it will still benefit you to check around for those with lower interest rates. Small loans do well with credit unions that typically charge less interest. Your credit score will be a factor in the interest is charged on your loan. Find out the range of interest charged before submitting your application. If you are denied, discover why and think about another plan. Applying for a loan too many times in a short period of time will affect your credit score. Doing so can also make you look very desperate for money. This is also an important factor in being denied a loan.
Know your finances and check up on your credit during the year. You are permitted to get one free credit report from the credit bureaus. Stagger them and find out how your credit is going three times per year. You will not want to apply for a loan if there is damaging credit history on your report in the last six months. Protect your finances as best you can so a car title is not your only choice, especially if you do not own your own vehicle.