Do you need urgent cash but have bad credit? You may be tempted to accept any loan terms you can get. Due to limited options, applying for a title loan may seem like a solution to your situation. You must, however, understand what this loan entails before you consider it. Title loans on cars are one of the short term loans in which you give out your vehicle as collateral.
This loan is easy to get as long as you have a car since lenders do not consider your credit score when determining eligibility. You can also acquire the loan and keep on driving your car as you continue making payments. Shopping around for alternatives is, however, wise since title loans are expensive and risky. They come with high-interest rates and costly processing fees. Pledging your car as collateral puts it at risk of repossession.
Before applying for a title loan, you should look for alternatives and weigh your options to avoid getting into more financial difficulties. Even if your credit score is not the best, you should consider other ways of borrowing. Look for a credit union or a local bank within your region and ask for financial assistance. Avoid big banks due to the high chance of being rejected with low credit. Credit unions are more considerate than other financial institutions since they focus on individual circumstances before approving small loans.
Some online lenders also offer personal loans to borrowers who don’t have a perfect credit score. You can approach peer-to-peer lenders for a personal loan. This is different from a title loan in that it is not secured. You don’t have to pledge your belongings such as a car to act as collateral for the loan. The lender can approve you for a loan based on your income. You must prove that you are capable of making repayments on time for you to get approved for this loan. As long as you have a stable income, the lender may overlook your credit rating.
Another cheap way of borrowing is credit card promotion. Though credit cards are risky, getting a loan once can help you get back on your feet. Make use of promotional offers that come with low-interest rates or a balance transfer offer. You need a proper plan to clear this debt within the shortest time possible.
If your credit score is poor and the above options don’t work, consider getting a cosigner. They can help you get approved for a loan from online lenders or even banks. The cosigner applies for the loan with you, and they pledge to continue making payments if you default. Though a cosigner takes responsibility for your debt, they don’t benefit in any way from it. This means that failure to make payments can affect the way you relate with the person offering to help you acquire the loan. Before this agreement, ensure that the cosigner understands the risks involved and can make payments if needed.