If you have bad credit and need cash quickly, what do you do? You can get an auto title loan using your vehicle as collateral. When you have an emergency situation and need cash fast an auto title loan can be a source of quick cash. And if you happen to be a subprime or high-risk borrower, it can also serve as a vehicle to rebuild a poor score.
Auto Title Loans Can Help Rebuild Credit
The credit bureaus often take into consideration the trend of a person’s credit history. Past indiscretions are not weighed as heavily as how a person has used credit in more recent history. When you are approved for a car title loan, and ensure that you make payments in a timely fashion and according to the predetermined repayment schedule, it’ll look better on your credit report.
What Sort Of Auto Title Loan Do I Need?
Auto title loans are usually short-term loans that are repaid after a month. Some companies will allow borrowers to choose how long they need to repay the loan. They may offer flexible payment terms allowing you to pay back the debt over a period of up to 24 months.
However, if you want to use your title loan for the purpose of rebuilding your score, it’s best to choose one with a short-term length. This will allow you to pay less in interest, because interest compounds on a monthly basis.
Have a Plan to Rebuild Credit
There are some things borrowers need to keep in mind when they use CA, OR, NM, SC or AZ auto title loans to rebuild credit. First, be careful not to spend the cash principal you receive from the auto title loan company. It is recommended that you stow the principal away in a dedicated savings account.
To improve your score, you must pay back your debts on or before their due date. If you spend the principal, you risk not being able to pay back the debt on time and may need to have your loan rolled over. When this happens, you’ll end up paying an even higher interest rate.
Secondly, you need a plan to repay your loans in time and on schedule. You may have to cut down on other non-essential expenses or divert funds from other areas of your spending in order to make your payments on time. Auto title loans could be a good for your finances and your credit report if you use the cash wisely. You could use it to make pending payments on your mortgage and prevent foreclosure, or for other essential expenses.
As long as you have every intention of repaying your debts, you can use this instrument to rebuild credit and improve your score. Once you have done that, you can apply for low-interest finance from conventional lenders.
Putting your vehicle up as collateral may seem a somewhat drastic way to get funds to improve your rating. But CA, NM, OR, SC, or AZ auto title loans could provide the help you need to get your finances back on track.