Buying a car is an extremely important decision to make, considering the necessary financial investment. According to Policy Advice, in 2019, the average U.S. loan amount for a new vehicle was estimated at $32,187, and $20,137 for used cars. Of course, this number is even higher for new vehicles. It is safe to say that most people generally do not have the means to pay in cash when purchasing a vehicle. This is when it is beneficial to get a car title loan.
What Is a Car Title Loan?
There are a variety of car loans that are available for most consumers. Car title loans differ from other types of loans because they are generally short term. In exchange for the loan, the lender will have the title to your vehicle until it is paid off. Car title loans will be for a certain percentage of the vehicle’s worth, which will need to be paid in a timely manner.
How Will Your Credit Be Affected?
When applying for this specific type of loan, it is rather common that the lender will not perform a credit check. This can be beneficial to the borrower because they will avoid having what is known as a hard credit check. This type of inquiry can knock your credit score down a few points. These hard pulls are common when applying for a credit card, mortgage, etc. Avoiding a hard credit pull is especially beneficial for those who may already have less than stellar credit.
As previously mentioned, avoiding a credit check is a huge benefit when applying for a car title loan. As a result, the approval process is very quick and easy in most cases. You are able to access your needed funds almost immediately. According to Forbes, your loan limit will hover around 25-50% of the vehicle’s value. This is important to be aware of due to the fact that if you are unable to make your loan payments, your vehicle is often the collateral taken by the lender. Being aware of what you can afford is crucial when searching for a car title loan.
There are clearly a few benefits to consider for car title loans as opposed to a standard auto loan. If you find yourself in need of a car title loan, feel free to reach out to us to get started. We would be happy to answer any questions you may have about the lending process. We take pride in providing care title loans Boise, ID residents rely on!