Situations that require you to have a significant amount of cash on hand happen. You never know when you might get sick, need serious home repairs, or get laid off from work.
Ideally, you’ve got some savings or an emergency fund stashed away so you can borrow from yourself. Most likely though, you’ll need a cash loan — and quick!
Car title loans and auto title pawns are the go-to emergency cash solutions for many. These two types of fast-cash sources have many similarities: both use your car as collateral, are easy to apply for, and don’t discriminate based on credit scores. It’s no wonder many people assume the two are the same.
A car title loan and an auto title pawn are vastly different, though. And these differences can make or break your ability to pay off the loan.
What is a Title Pawn?
An auto title pawn is essentially temporarily selling your car, but with the option to buy it back. Similar to how you can go to a local pawn shop and pawn off jewelry, phones, and other valuables, you can do the same with your car title.
It’s not just cars you can pawn off for immediate cash. If you own a truck, motorcycle, trailer or recreational vehicle (RV), or even a boat, you can use those, too.
But, take note that a title pawn is a viable option only if you’re willing to part with your car for a few months while you gather enough funds to pay off the loan.
Ins and Outs of an Auto Pawn
Similar to getting a car title loan, the initial auto pawn setup is usually over under an hour (sometimes even under 30 minutes). Unlike a title loan, though, an auto pawn only has fewer requirements:
- The vehicle
- A clean vehicle title under your name
- Keys to the vehicle
- A valid government ID
- Proof of insurance
Some auto pawn lenders may even waive the proof of insurance since they’ll be securing the car anyway. Moreover, you don’t need to present proof of income or ability to pay since you’re basically selling the vehicle.
A standard auto pawn repayment period is typically four months. You have the option to have the pawn terms rewritten to extend the repayment period.
But if you can’t pay off the loan amount, the lender won’t hold you accountable, although they will be free to sell your vehicle to recover the amount you borrowed.
When you want to “repurchase” your vehicle, you must pay the loan amount plus the interest and miscellaneous fees.
Advantages of a Title Loan
The amount you can borrow through a car title loan may be lower (25-50% of the car’s current value) than the maximum you can get from some pawn shops. But the advantage of opting for a title loan is that you leave the lender with the car still in your hands.
The ability to continue using your vehicle opens more avenues for part-time jobs that can help you pay off your loans. You can use your car for ridesharing, food or package delivery, and more.
Car title loan companies are also more flexible with repayments.
VIP Finance of Texas can help you when you need money for unexpected expenses. Aside from offering a 6% APR, we’ll plan the loan out for up to a year to make repayments easier for you.
We also offer cash advances in case you need more funds.
Visit any of six locations in the Dallas-Fort Worth area for a title loan in just 30 minutes!