Money troubles are never fun. It would be nice if we always had enough cash put away to cover our expenses, but there are times when that isn’t feasible. You never know when you could end up with a financial emergency that leaves you strapped for money, or when you could need funding to finance a new venture.
Many lending options take a long time to get and have low approval rates, but title loans are an exception. That’s why car title loans are a good idea when you need a quick, easy financial boost. And if you’re a consumer in Texas, you’re in luck, because the state has some excellent title loan options.
Although there is a federal law setting an age minimum of 18 for title loan borrowers, other than that, most title loan legislation occurs at the state level. A Texas title loan is technically just a loan that follows Texas’s title loan regulations. However, one common type of title loan in Texas that has become almost synonymous with the term “Texas title loan” is the 0-percent title loan.
True to its name, the 0-percent Texas title loan is one that starts off with a 0-percent interest rate. It’s similar to a credit card with a 0-percent annual percentage rate (APR) in that there’s an introductory time during which you can pay the balance without any interest. Of course, if you don’t pay back your title loan within that initial time frame, then you’ll need to pay interest on it, as a lender couldn’t keep a loan at 0-percent interest forever and stay in business.
Besides having those 0-percent title loans available, another benefit of Texas is how hands-off it is with the title loan industry. The state hasn’t put many laws in place to restrict what borrowers or lenders can do.
Take title loan limits as an example. Many states set a limit on the maximum amount that you can borrow through a title loan, and if you need more money, you’re out of luck. Texas doesn’t cap title loan amounts. The amount you can borrow is determined by the current market value of your car and what the lender is willing to loan you. For most lenders, this will be anywhere between 30 and 50 percent of your car’s value.
We’ve gone over the unique characteristics of Texas title loans that are beneficial for consumers in that state. Now, let’s consider why car title loans are a good idea no matter what state you’re in.
The Fast Application Process
Texas title loan applications are as quick as it gets in the lending industry. With a personal loan from a bank, you’ll probably need to bring in quite a few financial records and other documents so the bank can evaluate you as a borrower. The bank may not make its decision on whether to approve or deny your application for days or weeks. Even if it gives you an approval, it could then take another several business days before you have the money for your loan. That may not work for you if you need to pay for a home or car repair today.
There’s no digging through your filing cabinet when you want to apply for a title loan, because you’ll only need three things:
• Your car title
• Your car
• Your government-issued ID
The lender needs to inspect your car very briefly to determine its condition, which it then compares with the values listed in a vehicle value guide to figure out how much your car is currently worth. They need to keep the car title while you’re paying back your loan, but you get that back once the loan is paid off. And your ID is just so you can verify to the lender that you’re over 18.
How long will the entire application process take? You’re likely looking at less than an hour spent in the lender’s office before you get your money.
There’s No Credit Check
This is a big plus for borrowers who don’t have the best credit scores. The only thing that matters when it comes to the approval process for a title loan is the value of your car. If your car is worth something, you can get a title loan, and your car’s value will determine how much you can get.
The lender won’t need to run a credit check on you, making a title loan one of very few types of loans that are available with no credit check. When it comes to same day loans for consumers with bad credit, title loans are a great choice.
Another good thing about the lack of a credit check with car title loans is that it means your credit score won’t drop during the application process. Any time a lender runs what is known as a hard inquiry on your credit report, it can lower your credit score.
This means that if you go to multiple lenders and receive denials on your loan applications, each one may be lowering your credit score from the hard inquiry it runs, meaning you’re then less likely to receive approval on your next loan application. With title loans, this isn’t a concern.
You Keep Your Car
A title loan isn’t just based on the value of your car, it also uses your car as collateral. However, you won’t need to give up your car during the term of the loan. You must give the lender your car title to receive the loan, but you’ll still have your car and can continue driving wherever you need to go.
This ensures that a title loan doesn’t leave you inconvenienced. Whether you need to get to your job, your school or elsewhere, you still can. And as far as your car title is concerned, you’ll have that back as soon as your loan is paid in full.
Flexible Payment Terms
With most loans, you need to pay a set amount on every payment due date, and you can’t decide to pay less if you’re short on cash. Title loans are different. At the end of your title loan’s term, your payment will be due, which is your loan amount plus any interest, unless it’s a 0-percent title loan.
If you can’t pay this amount, then you can pay only the interest and renew your loan. You’ll start another term of the same length with the unpaid loan principal. Of course, there’s another interest charge in this term, meaning you pay a bit more this way, but it’s still a useful option when you need extra time to make your full loan payment.
These are just a few of the most significant reasons why car title loans are a good idea. Hopefully, you’re never in a situation where you need a loan. But if you are, it’s nice to have Texas title loans as an option.