Sometimes, despite your best efforts, you need to take out a loan to make ends meet. When this happens, it’s research and attention to detail that will make the experience a positive one and put you ahead of where you started rather than behind.
Title loans are a popular option for many of those with poor credit, as they’re accessible to anyone with the right collateral. However, defaulting on the loan means having your vehicle repossessed, which can be stressful. Considering this loan option? Here are five tips for a stress-free title loan.
Know the Qualifications
Before you apply for a loan, you need to understand what’s required to qualify. If you’re wondering, “how to get a title loan without a job?” or “can I get a title loan with no credit?” you’ll be happy to know that the answer is usually yes. The basic requirements for securing a title loan are:
- Having a lien-free vehicle with proof that it belongs to you
- Proof of identity
- Ability to pay the loan
If you don’t have a job, you’ll need to have some other source of income to prove that you can repay the loan. While the loan provider will take your car and sell it at an auction to recoup their expenses should you default on the loan, it’s much more economical for you to pay it back. In other words, the title loan provider wants you to get your car back.
Make a Payment Plan
You may know the amount you have to pay back and when, and you might have it broken into payments, but you also need to know how you’re going to pay it back. Don’t just say “I need to give them $50 every two weeks,” outline your action plan for doing so. Whether it’s getting a side hustle or taking on more hours at work, identify a realistic route to paying back your loan before signing on the dotted line.
Take Time to Read the Fine Print
No matter what kind of loan you decide to use, take time to read the fine print, and understand any additional fees or penalties that could increase your risk of defaulting. For example, many loan providers charge an administrative or establishment fee to set up your loan. Others charge an early repayment fee for paying your loan early.
Taking time to read the fine print and understand what you’re agreeing to will help reduce your stress and ensure you pay your title loan back on time.
Take Only What You Need
With a title loan, you’ll only be able to borrow as much as your car is assessed for. However, if your car is worth more than the loan you require, it’s important that you don’t overextend yourself.
By limiting yourself to taking only what you need, and not giving into the temptation to get a little extra, you’ll be better prepared to stick to your payment plan and ensure that your car stays where it belongs.
Pay a Little Extra or More Often
Many title loans use compound interest. That means that the longer you have the loan, the more you end up paying. Rather than paying monthly, pay biweekly. If you can’t commit to paying more often, try to sneak in an extra payment at least once. If your payment is set to be at $50 every two weeks, bump it up to $55 or $60 for a slight increase that can have big impacts over time.
As title loans are typically high interest, paying a bit more when you can will help you if there are times that making a payment is difficult. It will also help you pay off the loan quicker– or on time if there are early pay-off fees– and make your borrowing endeavor a success.
Borrowing isn’t for everyone, but it can help in a tough situation. Be smart when taking out a title loan and you’ll get it paid off without added stress.