Car Title Loans have been around for almost three decades and their demand has surprisingly been increasing. People often find themselves in tricky financial situations and this fact of life makes things like car title loans irresistible. In addition, there are auto pawn loans. Most people may be familiar with car title loans/title loans/auto title loans but few are acquainted with auto pawn loans or pawn loans. In this article, it is my intention to help you distinguish between the two and let you know when one would be preferable over the other.
Car Title Loans
These short-term loans can be acquired fast, in some instances within 15 minutes. That is their beauty; that if you need some serious instant cash, you can get some easily through this approach. As the name suggests, title loans require the title of your vehicle to work. The basic idea is that you offer a lien free vehicle title to a lender and you will receive a loan based on the estimated value of the vehicle.
Besides the title of the vehicle, other requirements include proof of residence like a physical address, driving license, national identity card, and in some instances, you’ll need to have insurance on the vehicle whose title you want to offer as collateral. You can either apply for the loan in person by visiting the offices of a title loan company or just apply online without leaving your premises. The process is often fast, and the longest it will take you to get the loan is within a day.
The good thing with car title loans is that you will still have your vehicle to drive around even after you have taken the loan.
The disadvantage of title loans is that the interest rate is often higher than you would pay with the regular loans from a bank and if you default you could easily lose your vehicle.
Car Title Pawn Loans
Here, do not expect me to go on and on as I did with title loans because there really is not much difference between a car title pawn loan/ title pawn loan/ auto pawn loan and an auto title loan.
For starters, everything I have written about title loans is true for auto pawn loans but the main difference is that with the latter, the lender not only keeps the title of your vehicle but they will also keep the vehicle. With title loans, you get to drive your vehicle around freely but with auto pawn loans, you will not necessarily have the same privilege. In some instances, the lender may let you keep driving the car but that will not be any different from title loans, so often, the lender will also keep the car.
Nevertheless, the advantage title pawn loans have over the conventional title loans is that you can get more cash since the lender gets to take so much from you. Otherwise, the risks are all the same; if you fail to pay up, chances are that you are going to lose your vehicle.
As you can see, there really is not much difference between the two kinds of short-term loans. The application process is the same for both but one approach will demand more from you. Before taking any loan, first do your math well and ensure you are in a good position to repay the loan.
I recommend you go for auto pawn loans when you need more money and you have bad credit. On the other hand, go for the conventional title loans when you just need some substantial quick cash (your credit score still won’t matter).