How Do Title Pawns Work If Don't Have Good Credit?
Is it hard for you to get a loan because of your low credit score? Are you sick and tired of being denied by banks and other lenders? You may be wondering how title pawns work for those with poor credit.
You’re not alone. A recent report by the credit bureau Experience revealed that 48 million Americans have poor credit or an average FICO score of 300 to 579. This percentage increased during the pandemic when businesses closed or downsized and left many unemployed or with a smaller reliable income. These people had no choice but to miss payments or use their credit cards to survive.
While the economy is now picking up, and people are getting back on their feet, their credit scores have taken a hit. However, they’re unable to re-establish their credit history because they can’t even qualify for a bank loan.
So How Do Title Loans Work For Those With Poor Credit?
Title Pawn Basics: Emergency Loans For People With Bad Credit
Not all loans require a high credit score to qualify. You can apply for title pawns and borrow up to $15,000 even if you have bad credit or no credit history at all. Why is that possible? Let’s look at how title pawns work, and why they’re one of the best loan options for people who don’t have high credit scores.
Title Pawns Are A Kind Of Secured Loan
Before approving a loan, lenders have to consider their credit risk, or the chances that the borrower will pay the loan back. There are two ways of managing their risk, which correspond to two types of loans: unsecured and secured.
Unsecured loans are loans granted based on creditworthiness. The borrower has established a track record of paying bills on time, does not have a lot of accumulated debt, and has many years of experience taking out different kinds of credit and paying it off.
Secured loans are granted based on collateral, which is any property of value that serves as a form of security. This type of loan may require a credit check but is less dependent on credit scores.
Title pawns are secured loans where you offer the vehicle title as security for the loan. During the duration of the loan, a lien is placed on the title. Lien simply means a legal claim to retrieve the property if the borrower defaults. It is immediately lifted when the loan is paid off.
You Can Still Use Your Car If You Get A Title Pawn
There is an ongoing misconception that you surrender your car when you get a title pawn—largely because of the word “pawn” and how it’s associated with pawn shops where you surrender your jewelry, watch, or other property and only get it back after paying off the loan.
This is not true and comes from not knowing how title pawns work. A lien is simply a legal claim if the loan agreement is not kept. If you make the payments on time, you can continue using your car.
Title Pawns Have Simpler Requirements
When you understand how title pawns work, you can also realize why it is faster, more convenient, and more accessible for people who have a hard time getting a loan.
Since title pawns do not require extensive credit checks, it does not have the strict income and employment criteria of other types of loans.
For example, banks will usually refuse loans to people who have irregular or seasonal income or get their money from non-income sources like pension, alimony, government aid, or family support. With title pawns, it doesn’t matter what kind of job or income source you have, as long as you can pay off the loan.
The Vehicle Title Is The Most Important Requirement
As explained in how title pawns work, the basis of approving a title pawn is the collateral or the vehicle title. So, you have to check if your vehicle title meets the following requirements:
- The vehicle title must be lien-free. This means that no other person or organization has a legal claim on the vehicle. It is not being used as collateral for another loan, it is not being disputed in court, and there are no judgments against it.
- The vehicle title must be registered under your name. Only the legal owner of the vehicle can use it as collateral for a loan. If the title is not under your name, you need to go to the local DMV to have it transferred to you.
- The vehicle must already be fully owned. If you are still paying off the car loan, the bank still has a lien or legal claim on it because you still owe them the remaining car payments.
How To Get A Title Pawn
Now that you know how title pawns work, you may be interested in applying for one yourself. Georgia Auto Pawn, Inc. is a trusted and reputable company to get you what you need. You can do a quick inquiry right now—and you don’t even have to leave your home.
Just fill out the online title pawn inquiry form, and one of our loan representatives will call you up to walk you through the process and requirements. You can also ask any questions you have about how title pawns work.
When you’re ready, you will go to the branch to complete the application. You need to bring the vehicle title, a government ID, and your vehicle for inspection. The approval process is quick and once it’s approved, you get the money the same day or the next business day.
Reach out now to find out more about title pawns, how title pawns work, and other loans for bad credit.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.