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If you’re reading this, you probably already know what title loans are and how they work. You may have even already taken one out before. Each year, millions of Americans use title loans as a way to get emergency cash, but for those who have never used this type of short-term loan before, there is a lot of confusion about what to expect when you get a title loan.
After all, there are all sorts of stories out there about these often misunderstood and maligned financial products. We’re here today to explain exactly what a title loan is, what to expect when you get one and what the future could hold for you when you have nearly instant access to the emergency cash you need.
The number one reason people take out a title loan is because of a cash emergency or unexpected expense that can’t wait. And considering that a title loan could provide you with up to $15,000 in cash in as little as 30 minutes, you could handle just about anything that comes your way. It’s hard to anticipate these types of expenses, because we simply don’t know what the future holds. One thing that is certain is that emergencies happen, and having the safety net of a title loan at your disposal makes the unknown a whole lot less scary.
Once you’re back on your feet, it’s time to start thinking about what your next step is going to be. If you were hit by an emergency, it’s important to get your life back to normal as soon as possible. What long-term plans were you working towards? Refocus and reevaluate your financial situation and goals. The next step might be to lay low and save for a while, or it might be to begin forming a solid financial foundation from which you can begin to build a more secure financial future for yourself and your family.
While terms may vary from loan to loan, you should start paying your title loan back as soon as you possibly can. Title loans can become expensive if you don’t pay them back promptly. These loans have high APRs because they are meant to be short-term loans, meaning the lender has only a matter of weeks to earn a profit from their risk. By paying your loan back as quickly as possible, you minimize your expenses.
Did you know title loans don’t impact your credit score positively or negatively? Title loan companies don’t report your payment history to the credit agencies, and they generally do not require a credit check for approval. That is because a title loan is a secured loan, using the value of your vehicle and it’s lien-free title as collateral.
Once your loan is paid back, you should take a moment to look back on how you ended up in the situation that required a title loan in the first place. Are there things you can do in the future to avoid it happening again? As the saying goes, an ounce of prevention is worth a pound of cure. A few simple precautions can go a long way toward avoiding having to face the same situation again in the future
Another thing that can help you avoid the need for another emergency loan in the future is starting an emergency fund dedicated to unexpected expenses. A fund like this doesn’t have to be a big investment. Even putting a little money from each paycheck into your emergency fund can prepare you for future expense, regardless of what they are. Accidents and emergencies happen, and it’s better to be prepared than caught flat footed.