You need some extra cash for a small investment, to fix a financial woe, or something else, and you are considering your options. You come across an ad for title loans, and your curiosity is piqued. Would a title loan or a personal loan be the better option? Take a look at the pros and cons of auto title loans to help you determine which financial solution would be the best.
Advantage: Auto title loans are oftentimes easier to get than personal loans.
One of the biggest draws of an auto title loan over a personal loan is that they tend to be easier to get. The primary thing the lender will be looking for will be that you have a vehicle in your name with a title that does not have any other lienholders. You will likely have to provide proof of income and identity, but even checking your credit score may not be necessary.
Disadvantage: An auto title loan may not give you a loan term as long as a personal loan.
If you need a loan that you can pay back in really small payments over a longer term, a car title loan may not be the best solution. Most lenders offer these loans on a short-term basis, which means you may have a shorter loan term and larger payments. For most people, however, it is easy enough to find a comfortable repayment plan that will work within a budget.
Advantage: Obtaining an auto title loan can give you fast cash.
If you need money in a hurry, a title loan may be the better solution over a personal loan. You can usually get a title loan without having to fill out a ton of paperwork or wait for your credit score to be checked. it is not uncommon to go in for a title loan and walk out with your cash within an hour.
Disadvantage: Auto title loans may not help build your credit.
Title loans do not always do a whole lot to benefit your credit score. The loans are short-term and are usually borrowed and paid back in a short time frame, so there is not a lot of time to establish a good payment history. Personal loans tend to be stretched out over the course of several months, so they help you to establish some payment history, which can improve your credit score considerably.