Title loans or title pawns are types of loans where an asset is kept as a mortgage or security. It is popular due to two important reasons. First, title loans do not take into account borrowers credit rating when determining qualifications, and second, title loans are fast and can be approved or cleared very quickly for loan amounts of as little as $100.
What Kinds of Title Loans Are There?
The most common type of a title loan is a car title loan. A car title loan is a short-term loan where your car title is used as collateral. You must be the lien holder. Loans usually range from 30 to 180 days. If you do not repay the loan, the lender can repossess the car and sell it to recover the loan amount.
Tips for Paying off Your Title Loan Fast
- Make one lump sum payment
Try your best to make one payment a year that is well above the regular principal and interest amount; it can help you pay off your debt quicker and save your money on interest payments.
- Budgeting or planning your expenditure
Once you know your monthly budget, you can begin to prepare your monthly expenses for the next month cutting your overspending. In addition to your monthly expenses or loan payments, be sure to factor in costs that occur regularly but not every month, such as annual insurance payments or car maintenance.
- Use apps for reminders
Use apps to set reminders as missing a loan installment should be avoided at all costs as it will put a significant burden on your finances.
- Make savings automatic
Automated transfers or savings are a great way to save money since it reduces your temptation to spend money and you don’t have to think about it. Invest in mutual funds through a Systematic Investment Plan (SIP) in which payments are deducted automatically every month.
- Build an emergency fund
We all need a buffer or an emergency fund for some of the uncertain situations in our lives such as any loan installment payment or medical emergency. Experts in personal finance suggest that you should have at least three months of expenses saved in an emergency fund.
- Avoid dining out!
Dining out is the number one expense for most households. Spend a few hours every weekend on shopping groceries and planning your meals for the entire week as it will save you money and you will be able to repay your title loan with no credit check quickly. By eating at home, you save money that would otherwise be spent on tax and tip—and you usually save calories too.
Title loans are a great alternative lending solution when you’re in a financial bind and need emergency money. But, borrowing responsibly and paying off your loan in a timely manner should be a priority when it comes to your monthly budget.