How To Get A Car Title Loan With Bad Credit

Car title loans are lending tools that use title documentation as the collateral for financing. Also known as cash advances, this type of loan has its pros and cons. It is, however, a reasonably easy way for people with bad credit to get a loan. Obtaining this type of funding generally involves a multi-step process that has the benefit of moving rather quickly. The process is the same regardless of credit standing.

Step 1 – Get Paperwork in Order

In most cases this documentation is called for to obtain car title loans:

  • A clear title to a vehicle
  • Proof of income for repayment, generally a paycheck stub

Car title loans can range in the amount of funding provided. Lenders will generally give as much as 50 percent of the resale value of the vehicle.

Step 2 – Find a Lender

Car title loans are not generally something banks handle themselves. There are private lending companies, however, that will write these loans. To find one, check in local newspapers or telephone books.

Step 3 – Apply for the Loan

The application process for a car title loan is usually streamlined. Even with a bad credit score, funding is backed by the title to the vehicle so lenders are more apt to grant approval. The actual paperwork involved and the terms can vary.

Step 4 – Review the Options

Before signing on the dotted line, it is important to understand all the terms of the loan. Since ownership of the vehicle is riding on repayment, take the time to look at:

  • How much the loan will truly cost – Car title loans can have extremely high interest attached. Rates can start in the 30 percent range and climb well into the hundreds.
  • The amount of payments – Be wary of installment payments that are unreasonably high.

Car title loans often provide a source of funding when others are simply not available. This is an option for those with bad credit scores, but it does pay to tread carefully when considering this type of loan.


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