Are you in a tight situation where you need cash now? Have you tried to get a loan through a credit union or some other traditional bank just for them to turn you down?
Have you heard about title installment loans and want to learn more about how they can benefit you? Like most other installment loans, title installment loans can provide you with quick access to cash to help you out in an emergency or cover an unexpected expense. To learn more about these loans and who you can reach out to for more information, continue reading below!
What Are Installment Loans?
Installment loans are loans you can receive to help you pay off debts or emergencies. These types of loans typically come with predictable monthly payments that you must pay on time each month. Each monthly payment typically covers paying interest and the principal amount borrowed.
It is important to note that no two installment loans are the same. Depending on your credit score, interest amount, the amount borrowed, and other underwriting factors, the amount you pay back monthly can look wildly different than another applicant. Although your repayment amount may look different than another person’s, your monthly payment should stay consistent and not change.
Different Types of Installment Loans
There are several different types of installment loans available on the market today. For example, there are title installment loans, personal loans, and mortgage loans.
Mortgage loans may have variable rates, but most other installment loans are fixed-rate loans. This means that the interest rate you sign for on your contract stays the same with these other installment loans. Mortgage loans with variable rates may change the interest rate after a certain period of time.
Unsecured vs. Secured Installment Loans
Depending on your lender, your loan can either be secured or unsecured. Secured loans have some form of collateral, such as an asset. For example, when you get a title installment loan, your vehicle is the collateral for the loan in exchange for a sum of money.
As you may have guessed, unsecured loans do not have anything backing them. Most lenders who offer unsecured loans approve these loans based on your credit and your income.
In general, interest loans on unsecured loans are usually higher than secured ones since no hard asset is backing the loan. So if you were to default on your unsecured loan, the lender assumes that you will pay out on the loan from your personal assets or income. Defaulting on a secured loan puts your collateral at risk.
How Do Installment Loans Work?
Installment loans work by providing you with a lump sum of money once the lender approves your application. As mentioned earlier, if you have an unsecured loan, the lender approves your loan based on your income and credit score. If you are applying for a secured loan, your collateral secures the loan in exchange for the sum of money.
How to Apply for an Installment Loan
Applying for an installment loan is relatively straightforward regardless of what type of loan you need. Once you find the lender you wish to work with, you will most likely need to fill out an application to get the process started.
Compare Lenders
Before you fill out any paperwork, be sure to compare different lenders before committing to one. See what other clients did or did not like about working with a specific lender and take a look at their rates. There are some lenders who practice predatory lending, which is a vicious way to keep borrowers in debt.
Pre-qualify
Instead of blindly sending in your application to several different lenders, you should see if they have a pre-qualification process. This helps you understand if the lender will even consider your credit profile and income background before you send in the application.
Pre-qualifications conduct soft pulls on your credit, which means it does not appear on your credit report as a hard inquiry. When you apply for a loan for approval, the lender pulls a hard pull on your credit. You don’t want to have too many of those on your credit as it can negatively affect your credit score.
Add a Co-applicant
If you don’t have substantial income or a strong credit profile, you may want to reach out to a co-signer to boost your approval odds. Most applications allow you to put up collateral to strengthen your approval chances.
When you add a co-signer, their credit and income are also considered, which can boost your chances of receiving a “yes.” If you decide to use a co-signer, ensure both understand the risks of co-signing. If you were to default on the loan, the co-signer is legally responsible for paying back the debts.
Fill Out the Application
The application will ask you for your personal information and your reason for needing the loan. The lender will need personal information such as your name and best contact phone number.
Additional information requested by the lender:
- Home address
- Place of employment
- Annual income
- Social security number
Make sure that all of your information is up to date to ensure that you don’t miss any communication from your lender. They may also require you to submit information about your driver’s license or state-issued ID to verify your identity.
How Do Installment Loans Affect Your Credit?
As mentioned earlier, when you apply for an installment loan, the lender will have to conduct a hard pull on your credit. Hard pulls allow the lender to see all aspects of your credit file to make a better decision on your credit worthiness.
Soft pulls only give lenders a glimpse of your credit score. It is important to note that even if you receive a pre-approval, that could change once the lender conducts a hard pull.
Your score may temporarily decrease even if you receive an approval with a hard credit check. This is not to cause too much concern as it shouldn’t affect your score for too long.
Negative Consequences of Installment Loans
An installment loan can negatively affect you only if you miss your payments. There are severe consequences for missed or late payments, so make sure you pay the loan on time.
Paying your payment thirty days or more late can affect your score by 100 points. It is always best to reach out to your lender as soon as possible if you know you’re going to miss your payment.
Most lenders are willing to work with you and won’t report to the three major credit bureaus as long as you are honest with them and try to work it out. Not all lenders are as lenient, so don’t take out a loan if you know you won’t be able to pay it back.
What Is a Car Title Loan?
If you are interested in a car title loan, you should be aware of a few things about this loan. A car title loan is a short-term loan that you can take out in exchange for your vehicle’s title. Lenders who authorize these loans take possession of your vehicle’s title as a repayment guarantee if you default on the loan.
How Does a Title Loan Work?
Once you’ve found a title loan lender you want to work with, you will have to submit your information to them. In order for you to receive money, you must have positive equity in your vehicle. Most lenders require you to have a clean title before they take you on, but others can authorize the loan based on the available amount of equity you have on your vehicle.
Vehicle Inspection
If the lender decides to take you on as a borrower, they will need you to bring the vehicle to one of their locations to be inspected. Most title loan lenders allow you to take between 25% to 50% of your equity in the car.
Once you’re at their location, the representative will take photos of your vehicle, take the title from you, and install a tracker on the car. The tracker is put in place to ensure that they can recoup their losses if you decide to stop paying your debt or decide to stop contacting them.
Receive Your Funds
Granted, everything goes smoothly, the lender will wire you the money to your bank account, or they will write you a check. Most title loan lenders have it set up to deposit the money into your account because they don’t typically have money at their places of business.
Repaying the Loan
Most car title loans are short-term and only have repayment terms between fifteen and sixty days, depending on your lender. Others provide you more time but make sure you check the terms of your loan before you take on anything. If you have a shorter repayment term, be sure to make your payments on time.
How Much Can You Borrow with a Car Title Loan?
As mentioned earlier, you may be able to take up to 50% of the vehicle’s value. So if your car is worth $10,000, you can possibly take up to $5,000 as a loan. Of course, each lender has its own rules and regulations, so you may be able to receive more from one lender than you would from another.
Advantages of Car Title Loans
One of the most significant advantages of getting a title loan is that you can have quick access to cash. If you have an emergency situation and you aren’t able to receive an approval through other means, a car title loan may be your next best option.
They Take Bad Credit
When you work with a car title loan lender, they may or may not take a look at your credit. Even if you don’t have excellent credit, they may still extend the loan option to you based on the vehicle’s value. After all, if you default on the loan, they will take possession of your car and sell it to recoup the money they lent you.
You Can Still Use Your Car
Even though the lender holds the title of your vehicle, you don’t have to surrender the actual vehicle. This means you still get to drive around in your vehicle so you can take care of other errands and go to work.
Disadvantages of Car Title Loans
One of the most significant disadvantages of working with these companies is the interest rate. On average, these loans have astronomically higher interest rates than other personal loan options.
This is mainly because the lender has to mitigate their risk. If you have bad credit or not so great credit, the lender takes on the risk that you may or may not pay back the loan. To mitigate that, they charge higher interest rates.
Short Repayment Term
As mentioned earlier, most car title loans have short repayment terms. This could pose to be an issue if you aren’t able to repay the loan within a timely manner. Before you take out a car title loan, make sure that you are financially ready to take on this risk.
Apply for Your Car Title Loan Today
When you’re in a pinch and unable to get a loan through traditional means, you can reach out to a reputable company for title installment loans. Even though there is a risk that you could lose your vehicle if you don’t communicate with the lender or don’t pay your monthly dues, this shouldn’t be a problem so long as you keep up your end of the contract.
Contact us now if you’re ready to see what you’d be approved for! Our team is prepared to answer any questions or concerns you may have about your car title loan.