Let’s say you find yourself in need of cash to cover an expense like rent. The idea of selling some of your valuable possessions might sound like a good idea. After all, your bills still have to be paid at the end of the day, and late fees and penalties just mean more debt for you. You may be thinking that pawning your TV or other household treasures is the fastest way to put money in your pocket, but you may be overlooking how title loans can help when you’re in a bind. Your credit score doesn’t have to hold you back from getting the funds you need to make ends meet, and you don’t have to pawn your belongings to get you through to your next payday.
Understanding what a car title loan is and how they work is the first step to determining whether they are the right choice for you. When you go for a car title loan, all you need are a few simple documents and your vehicle for inspection. The process can take as little as 30 minutes, regardless of your credit score. The best part is that unlike pawning your valuables, you can still use your car while repaying the loan. That means you can still take your kids to school or practice and drive to work without any interruption to your day-to-day life.
First, you need to own a vehicle outright, which basically means it is completely paid off and in your name. You also need the vehicle title, also known as the pink slip, as well as a valid driver’s license or state-issued photo I.D. If you have all of these items, you have everything you need to get a title loan in Illinois. Your title loan provider will require that you bring these items to their location, where your vehicle will undergo an inspection to determine the amount you could qualify for. Because these loans are secured by the vehicle title, there are no credit checks required for your approval.
You may be familiar with pawn shops already, and may already be aware of the pros and cons of pawning your valuables, but they’re worth reviewing. If you have gold jewelry or high-end electronics that you don’t mind parting with, you can cash them in for the extra money you need today. You can walk into any pawn shop where an employee will assess the value of your items. If you want to recover your items, you’ll need to make sure that the loans and any interest is paid or else the pawn broker will resell your items to cover their losses.
This can happen very quickly, as they only offer you a small percentage of the item’s actual value and have limited space in their shop to warehouse goods. For example, if you bring them a TV you purchased for $500, they will likely offer you around 40% of what it is worth used on eBay. That means you’d probably get around $120 at best. If they can sell it for $200 the day after you miss a payment, you better believe they will.
When you pawn your valuables at a pawn shop, you risk losing these assets if you run out of time; with title loans, there is a little more wiggle room. In fact, you can roll over your title loan by simply paying the interest. Whenever you use the value of your possessions for a pawn or loan, there’s a risk involved. If you have a steady income and you’re responsible for making your scheduled payments, however, either may be a valid option to address your fast cash needs.
But the value of your treasured possessions may vary based on the pawn shop or the representative, whereas the value (or at least an approximate value) of your vehicle is based on a quick evaluation. If you check the Kelley Blue Book value, you already have a ball-park figure to work with. This may already be quite a selling point, but the best thing about a title loan is that, unlike pawning an item, you get to keep and drive your car as long as you continue to make your payments. That’s like having your cake and eating it, too!
As with any other major financial decision, you want to go into it with your eyes open. If you aren’t sure whether you’ll be able to make loan payments and you have old gaming consoles or jewelry that you wouldn’t mind parting with, pawning these items may be a more attractive option. But if you are confident in your ability to repay your title loan, you can drive away in your car with cash in pocket without the risk of losing something with sentimental value.
If your car is how you get to work and back, you can take out a title loan without losing access to your vehicle, which means you can keep making money rather than missing payments, dealing with overdraft fees, or falling further into debt. Review your options with your potential lenders to find out the terms and conditions before making a final decision. Every case is different, but no one knows your situation better than you do.