Car Title Loans: Good or Bad Idea for Borrowers?
Its been a hell of a week. Hell of a month. Hell of a year. No matter what you do, your finances just seem to be spiraling out of control. Every time you almost get it all settled, something happens that puts you right back where you started. Your credit isnt great, you dont have an emergency fund, and no one you know can lend you money. What do you do when you need cash fast?
Well, a lot of people turn towards title loans. You might have heard that these are a little sketchy, but are they really all bad? Are title loans ever a good idea?
What Is a Title Loan
First, lets back up and talk about what a car title loan actually is. It is a type of secured loan in which you put up the title of ownership for your car as collateral. If you fail to pay back the loan by the due date, the lenders have a right to repossess your car and sell it for profit.
Title lenders are usually located in their own shop (rather than housed in a bank or alongside a more traditional lender), and you can be in and out with cash in minutes with up to about half your cars value in cash. Part of what makes car title loans so appealing is their ease of access. There is very little required to qualify.
What You Need for a Car Title Loan
- A valid government-issued ID
- Proof of residency
- Proof of income
- Names and phone numbers of a few references
- A car that you own outright
Depending on which lender you choose, they might have slightly different requirements, but the above are pretty standard.