People get low credit scores for various reasons – failing in paying credit cards and mortgages, lavish lifestyles, bankruptcy and accidents. The good news is there are ways to salvage and fix credit scores. Borrowers can consult with their financial advisors about this and come up with plans that are suitable for them.
On the other hand, a new alternative is available for those with less than perfect credit score in the form of auto title loan. As long as your car is fully paid without other pending financing then automobile title loan might be an alternative solution to fix your credit score.
Auto title loan is a convenient way to acquire cash in which the title of the car is used as the collateral. Payments of dues are done within two weeks to a month from the date of the loan. However, you have to keep in mind that if you are not able to pay the loan amount, there will be a condition of rolling over the loan payment for another payment time which has larger interest aligned with the loan from defaulting. In addition, because annual percentage rate for title loans are high, you might have to pay more than the borrowing amount.
The good thing is, when it comes to auto title loan, there is no credit check done. The only major consideration is the condition and value of the car. In addition, since only the title is used as the collateral, you can still use your car while paying your dues.
To the lenders, auto title loan is considered as relatively of low risk. This is because the amount borrowed is often far less than the value of the car. However, this type of loan is highly risky to the borrowers since you might end up paying more if you fail to pay on time. More often than not, a single missed payment can jeopardize the ownership of the vehicle because it may be repossessed and you may have to pay for the additional fees from selling the car.
With these details in hand, it is important to think thoroughly and decide wisely if using automobile title loan as an option to improve credit score is a good alternative. Although this is an easy way to get cash, it is also risky if you’re unable to meet the payment obligation. For this reason alone, it’s important to weigh the pros and cons of title loan.
On a lighter note, title loan can also be a way to train you to be responsible in paying your debt and managing your finances well. If you can establish a positive record, this type of loan can be a great solution to your low credit score.
On a final note, availing automobile title loans is just one of various ways you can fix your credit score. It’s best to talk to your financial advisor. The better your advisor understands you and your situation, the better equipped he is to recommend the best solution to your unique situation. And for free yet reliable annual report, you might want to avail yourself of TRW credit report.
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Tags: Auto Loans