Auto Title Loans

The economy is slow, jobs are scarce, and commodity prices are going up. On top of that, consumers are experiencing a credit crunch that is making it extremely difficult to qualify for financing, line of credit programs, and personal loans. In order to get around these current facts, consumers will have to think outside the box and get creative with how to qualify for a loan. People with bad credit will have even a more difficult time qualifying for those who have excellent credit. However, people with good credit are being turned down for loans as well because of the current credit crunch.

Loans that use collateral to qualify are typically easier to obtain than loans that have no collateral. These types of loans that use collateral as a deciding factor of qualification for the loan are called secured loans. One popular type of secure loan is called an auto title loan. Auto title loans are loans where people will put up their vehicle’s title as collateral, making the loan a secured loan. People who have bad credit will be able to obtain a loan if they use their vehicle’s title as collateral, but there are some downsides to this that borrowers should be aware of.

Since auto title loans are primarily used by those who are denied an unsecured loan, the borrower imposes more of a threat on the lender than borrowers with excellent credit. This means that the lender must charge more interest on the loan in order to effectively reduce the amount of risks that a borrower may have on the lender. Many people view auto title loans as a bad idea because of the amount of interest that is typically associated with these types of loans. However, auto title loans are a better idea than a payday loan or a cash advanced loan when used properly.

Even though auto title loans are known for having such high interest rates, the borrower can avoid these rates by paying off the loan early. In fact, if the borrower uses an auto title loan and pays off the loan early, they will not only avoid some high interest payments, they will also be reestablishing their credit rating as well. People who are considering on using an auto title loan should first do some research to be informed about the vehicles value, as well as the financial institutions that offer these types of loans.

The first step to take is to find out the exact value of the vehicle in which the borrower is using for collateral on an auto title loan. The value of a used vehicle can be looked up online at the Kelly Blue Book website. The Kelly Blue Book will give accurate detailed information about the worth of the vehicle that a lender will also look at. If the borrower needs a bigger loan than what their vehicle is worth, they are advised to use some other type of financing. The next step the borrower should take is seeking out the right financial institution that is offering the lowest rates on auto title loans.

Some credit unions offer auto title loans, and credit unions are notorious for offering the best interest rates on all types of loans. Borrowers must obviously have the title in their procession in order to qualify for this type of loan. Other documentation like employment verification and financial statements may be required by the lender. The lender will focus on the value of the vehicle that is being used for collateral more than the borrower’s credit rating. This helps individuals with bad credit still obtain a loan when needed, and the borrower is able to reestablish their credit rating in the process.