If you’ve given up any hope of securing a loan because of your bad credit or cash shortage, collateral loans may be just what you need. It’s not uncommon for most individuals at some point in their life to get caught off guard by an unexpected financial emergency that’s popped up or past due bills that keep piling up. Emergency savings or a quick loan usually take care of these unexpected expenses.
But if you have poor credit or lots of debt, finding the loan you need is nearly impossible, because most lenders will only loan you money based on your past financial habits. As you probably experienced already, a lender will not be willing to lend you money today because of a foreclosure, repossession or something else in your credit report from the past.
Most loans are approved based on your old financial habits from years ago. If you’re still paying for mistakes that you made in the past, collateral loans will save you from getting denied for the cash you need because of your past mistakes.
And that’s because collateral loans don’t look to your past to help you. Lenders offering collateral loans focus on the present and the future.
What is a collateral loan?
If you’re wondering what are collateral loans, we’ve written this guide to help you understand how collateral loans work. Knowledge is power and we’re here to help you understand what is a collateral loan so that you can use the information to your advantage.
Collateral loans are a type of loan where you leave something of value as the guarantee that you will pay the loan back. The item of value is known as collateral. When you offer a lender something as collateral, you give the lender the confidence they need to lend you the money you want. The item you leave as collateral shows that you are serious about paying your loan back. Because if you don’t repay the loan, the lender can keep your collateral to sell off and recover the money they lost to you.
There are a few types of collateral loans. Technically, a home mortgage loan is a collateral loan, because the house you purchased and currently pay off with monthly mortgage payments serve as collateral for your loan. If you don’t pay the mortgage on time, you lose the house.
The most popular and convenient type of collateral loans are car title loans. If you’re wondering how collateral loans work when you use your car as collateral, read on to understand.
What are collateral loans that use your car’s title or registration as collateral?
When you borrow money with no credit check as quickly as the same day you apply using title loans or registration loans, your car serves as the collateral.
With title loans, your car’s free and clear title, will serve as the collateral for these types of collateral loans. With registration loans, you can owe money on your vehicle still. The lender will want to use your car’s registration for car registration collateral loans. That’s the main difference between title loans and registration loans. The rest of the process is generally the same.
How collateral loans work when you borrow using title loans or registration loans:
To get car-based collateral loans, you simply fill out a simple loan application and get a car title loan estimate back quickly. There’s no mystery to how collateral loans work. The loan is based on your car’s value. Once a collateral loans lender sets a value for your car, you can borrow a large amount of that value. Your car’s title or registration is left with the lender as the collateral to cover the loan until it’s paid back.
Vehicle collateral loans are special because all you leave as collateral is the registration or title to the car—you get to keep driving your vehicle while you pay the loan back.
Vehicle collateral loans are designed to be the most convenient of loans because you are free to keeping driving your car to and from work or wherever you want to, as you normally would. The car’s title or registration (and not the car itself) is the collateral for the loan.
Collateral loans are a lifesaver when you are dealing with those stressful moments life throws at you. You don’t have time to worry about your credit score or long loan applications. You need money quickly to stop the bleeding because landlords, past due bills and credit collectors will not wait. You can't afford to wait around for money hoping that you will get a loan. You need a loan that is the sure thing fast--and collateral loans are the answer.
What is the collateral loan application process like?
Borrowing the cash you need using collateral loans is easier than applying for any other type of loan on the market. There are just a few basic steps that will get you to the cash you need in your hands quickly and easily.
The collateral loans application is made up of two basic sections: personal contact information and details about the item offered as collateral. Applying could not be faster or easier and can be usually done on the go from a smartphone, or from your home at any hour, using the online application.
Once you enter personal information like contact details, home address and monthly income, you get to the second section of the collateral loans application. If you are borrowing using car collateral loans, you will enter your car’s information like year, make, model and mileage. Your car’s information entered in the application will help the lender figure out the value of your car to set how much you can borrow.
After you submit an application, a collateral loans expert will process the application quickly to get your approved fast. Not having to deal with credit or background check saves you days of waiting. You’ll get an collateral loans approval with a loan estimate and a short list of documents you’ll need to bring to pick up the money you need to borrow.
The collateral loans process is short and simple. It’s a modern solution for individuals that traditional banks are not willing to help.