Do Title Loans Have Any Effect On Your Credit?
Everyone at some point in their lives will need to come up with some money quickly. Things happen such as unexpected bills, emergency medical problems and more can mean having to pay money you weren't expecting to. While some people may have money saved up for these emergency situations, not everyone does. What can make matters even worse in these situations is not knowing exactly where to get the funds you need to get through these difficult financial times. When you have bad credit, your options for obtaining loans when you need money quickly are few. Thankfully, there are still some loan options available if you just take the time to research them. One such option for borrowers with less-than-perfect credit is a title loan.
Typically, whenever you pay off a loan on time, you will see your credit score go up. Title loans generally do not have any affect on your credit because no credit check is needed when applying. A title loan is a secured loan using your car as collateral. Secured loans do not require a credit check. Unsecured loans do require credit checks because you don't have to put up any collateral for the loan. When you apply for a title loan, you are essentially borrowing money off the value of your car. A loan like this is similar to when you take out a home equity loan against your house and your house is the collateral used to secure the loan. While a title loan has no negative effect on your credit score, it also has no positive effect on your credit score when you pay it off. In the event that a credit check is done, title loans do not have any lasting effects on your credit score.
According to www.consumer.gov, title loans are small, short-term loans that you can apply for from lenders. To obtain a title loan, the lender will put a lien against your car's title until you repay the loan in full. The amount of money you can get for a title loan will be dependent on the amount of value you car currently has at the time of applying. These loans are secured loans because you are putting your car up as collateral in order to secure the loan and get approval. While these loans are considered short-term, they do carry higher interest rates than other type of loans that you can get such as personal loans and peer-to-peer loans.
There are not too many requirements in order to get approval for a title loan. Firstly, you must have a vehicle of value with a clean title. There are many types of vehicles you can use to apply for a loan using the title such as cars, trucks, SUVs, RVs and motorcycles. The borrower must be at least 18 years old and provide the lender with their name, address, zip code and phone number. The current mileage of the vehicle must also be supplied during the application. The vehicle information that needs to be supplied will include its year, make, model and mileage. According to www.en.wikipedia.org, you must also have a valid form of government-issued identification in order to get a title loan as well.