Should I Pawn My Car Title?

iQuanti: Many vehicle owners who need cash fast have likely heard of or considered pawning their car title for a title loan. This loan can get you cash fast, and you can keep driving your car as you repay the loan. Here's how title pawns work and some instances where pawning a title for this type of loan may make sense.

What is a car title loan?

A car title loan lets you use your vehicle title as collateral to borrow money. Most lenders require you to own your vehicle outright to qualify for this type of loan. To get a title loan, you'll first fill out an application online or in store. Then, the lender will inspect and appraise the vehicle. If approved, you can receive a loan amount worth 25 - 50% of your car's value.

If you agree to the terms, you can get the loans that same day. Better yet, you can continue driving your vehicle while the loan is outstanding.

When should you pawn your car title?

Pawning your car title for a title loan can make sense in some situations, including:

When you need more money

With secured loans like title loans, you can typically receive more money than you would with unsecured loans. This is because these loans are considered less risky to the lender, since you're providing your car as collateral. Getting a title loan can potentially give you more money than other loans if you need to fund larger expenses, like paying a medical bill or funding a home repair project. 

If you have poor credit

Since title loans are secured, title lenders often have less strict credit score requirements. They'll consider factors in addition to your credit score, like income and current debts, when deciding whether to approve you. This means that borrowers with poor credit may be more likely to be approved for a title loan than other types of loans with higher credit score requirements. 

If you want to save on interest

Title loans tend to offer lower interest rates than some unsecured loans. This could make your loan easier to pay back and reduce your chance of losing your vehicle.

Borrow money fast by pawning your car title

Pawning your car title by getting a title loan can be an effective way to get money if you're willing to temporarily give up your car's title while the loan is outstanding.  You may be able to get a larger loan amount and pay less in interest than you would with unsecured loans.  And you can keep driving your car while you repay the loan, which can be a huge benefit if it's your primary mode of transportation. Make sure to do your research on lenders and loan options to ensure you get a legitimate loan offer with terms you can afford.

Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.

Source: iQuanti, Inc.

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Categories: Personal and Family Finances

Tags: financial services, loans, personal finance