If you currently have poor credit and are seeking an auto loan, you may have come across something called a car title loan. Although they sound pretty great for those who have little to no credit, it’s important to educate yourself on what exactly goes into this type of auto loan.
What is it?
A car title loan is a type of secured loan in which the lender has possession of your car title as collateral until you fully repay the loan. This is a short-lived loan that offers a small amount of money, usually repaid in about 15 to 30 days.
Lenders of this particular type of loan aren’t usually looking at the driver’s credit history. Instead, the lender solely focuses on the value of your vehicle. This is good news for someone who has little to no credit history, and of course, those with poor credit backgrounds.
Unfortunately, you may land among a lender who could potentially take advantage of your poor financial situation. Car title loans are known for their unreasonably high interest rates because of their short lending period.
How to choose carefully
Don’t just accept loans from anyone. Just because you may not be in an ideal financial situation, doesn’t mean you should settle for a bad deal. Shop for an auto loan, just as you would if you had phenomenal credit. Additionally, seek advice from experts, such as your bank, to figure out your best option.
If you decide that a car title loan is the auto loan for you, then make sure you carefully and thoroughly review the terms of the loan. Know exactly what you’re agreeing to and beware of “ad-ons” that may increase the cost of your loan. Get to know your lender and ask every question you can think of—if it doesn’t sound right, don’t agree to the loan.
Have questions about auto loans? Contact Yes 4 Credit Oregon for more information about obtaining auto loans with poor credit. We specialize in helping those who are new to purchasing a car and those with little to no credit. Check out our website and contact us for more information.
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