Would a conventional loan or an auto title loan be more beneficial to financial troubles? I suppose it would all depend on your financial situation at the moment and what you needed the money for. Most often, an auto title loan is used for emergency purposes since the loan is secured by the title to the vehicle. People who do not qualify for conventional loans will end up looking for other options like a title loan.
Everyone situation and financial circumstances are different, but there are general reasons why an individual would take out a secured title loan. How would your financial situation run the course if there were emergency costs piling up and they needed to be paid right away?
*I don’t have any or enough available balance to help me out.
*My credit score is too low to apply for new credit.
*I have no savings account.
*My bank won’t help me due to my score.
If any of these statements are true, there is a good chance that an auto title loan may be on the horizon. Of course, there is one major hurdle to cross over in order to have this financial opportunity available – you have to own the title. A clear auto title is what makes this money option a quick transaction.
Pursuing a conventional loan at a bank is a guaranteed search into your credit report. Banks and credit unions will look through your credit history for any information they may consider risky. Late or missed payments, repossessions or debt in collections are a few examples of reasons to not lend an individual money. If the negative marks are a few years old or not damaging enough for a full blown “No”, the financial institution may ask for a guarantor for the loan. A guarantor is a co-signer with good credit to sign for the loan as well. It is a second chance option for the lender to collect on the loan if the one applying fails to make payments.
If a conventional loan is the avenue which best fits your situation, it will still benefit you to shop around for those with lower interest rates. Small loans do well with credit unions who typically charge less interest. Your credit score will be a factor in what interest is charged on your loan. Find out the range of interest charged before sending in your application. If you are denied, find out why and think about Plan B. Applying too many times in a short period of time will hurt your credit score. Doing so will also make you look desperate for money. This is also a key factor in being denied a loan or new credit.