If you’ve been looking for a way to get hold of a short term loan, the chances are that you may have come across something called a car title loan. A car title loan is a short term loan that you take out based on the value of your vehicle. Typically, people opt for a car loan when a low credit score means that they are unable to access other types of loan such as bank loans and credit cards. Let’s take a more detailed look at car title loans, and how they compare to other types of loans.
Short term loans
Short term loans differ from other types of loan because, as the name suggests, the capital is only loaned for a short period of time. The idea of short term loans is that they are given to cover a specific business or personal need and there is a fixed date by when the loan needs to be paid back. In general, short term loans will have a much higher rate of interest than longer-term loans. However, because they are paid back over a shorter period of time, you can end up paying less interest overall. It’s important that you understand exactly how much interest you will be paying when you take out any loan, and that you can afford to pay it back.
Usually, short term loans will have a quicker processing time, meaning that you can have the money more quickly, and they are generally easier to get approval for than longer-term loans, which usually require a good credit rating. Another type of short term loan that a lot of people are familiar with is a payday loan. To fully understand what a car title loan, we’ll compare it with a payday loan.
Car title loan vs payday loan
Fast Money car title loans offer car title loan in Lealman, Fl development, and they offer a lot of information about how car title loans work. The reason that people might choose a car title loan over a payday loan is that rather than being based on your credit score, car title loans are made purely based on car ownership. This means that people with poor credit scores can still access financing. It’s also usually slightly quicker to get your money paid to you through a car title loan.
In order to qualify for a car title loan you must own a vehicle, and if you have purchased your vehicle through vehicle financing you must be in the final few payments. The loan works by you leveraging your car in exchange for a loan of up to 50% of its value.
It’s important to note that while you are paying off the loan, the lender will own the title of your car. You can still keep it and drive it, but the lender owns it. If you were to default on your loan then the car could be seized to cover the remaining balance on the loan.