In 2022, Americans have an average of just over $62,000 in their savings accounts, which is down from $73,100 in 2021. You might not have that much saved up, and to make matters worse, you’ve quickly drained your savings due to emergencies and unexpected costs.
Another emergency’s popped up, and you barely have any money left. In this case, a car title pawn might be an option.
What is a car title pawn? It’s where you borrow money by using your car title as collateral.
Read on to learn more about the pros and cons of getting a car title pawn.
Pro: There’s No Credit Check
If you don’t have good credit, then it’s hard to get loan approvals. But because you’re offering up your car title as collateral, your credit score won’t matter here!
As a result, you won’t have to go through a credit check nor will you have to go through the disappointment of rejection.
Pro: Approval Is Quick
When you need cash, you need it fast. Even if you have good credit, a traditional loan can take days or even weeks for approval.
If you can’t afford to wait, then a car title pawn can be a lifesaver. Some lenders can approve you in 30 minutes or less, so you’ll have money to pay off that emergency right away.
Pro: You Can Keep Your Car
Just because you offer up the vehicle title as collateral doesn’t mean the lender keeps your car. While you’re repaying the loan, you can still keep and drive your vehicle, so you can continue life as normal. You won’t have to worry about arranging for transportation to and from work and other important things.
Con: Interest Rates Can Be High
Because lenders are giving money to people with poor credit, they’re taking on a bigger risk. To compensate for that, they’ll have very high interest rates.
As long as you make payments on time and pay off your loan quickly, this shouldn’t affect you too much. But if you fall behind, it can add up.
Con: You Might Lose Your Car
In the worst-case scenario, if you fail to repay your loan, the lender can take your vehicle. So you’re unsure of your finances, it may be too big a risk to take, especially if it’s the only car in your household.
Again, so long as you stay on top of payments, this won’t be something to worry about.
If you still have questions, this guide explores car title pawns more.
A Car Title Pawn Is a Viable Option
When you need cash in a pinch, a car title pawn is a viable option.
It’s true that interest rates can be high and you might lose your car if you fail to make payments. But if you’re responsible and confident about repayments, then this type of loan can make a huge difference in your life.
Read more of our blog posts to find out more about personal finance.