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This is a photo of a black couple going over their plan on getting out of title loan debt

Understanding how to manage debt is important for paying the lowest amount of interest and maintaining a high credit score. But you can’t manage all your debt the same way, because one type of debt can be very different from another. If you have title loan debt, here’s everything you need to know about how […]

Understanding how to manage debt is important for paying the lowest amount of interest and maintaining a high credit score. But you can’t manage all your debt the same way, because one type of debt can be very different from another. If you have title loan debt, here’s everything you need to know about how it compares to other types of debt and how you can manage it effectively.

How Title Loan Debt Compares to Other Types of Debt

The first point you must understand is that title loans are designed for short-term use. The most common length of a title loan term is 30 days, and that’s true across the nation and in Texas. There are a few select states with different term lengths required by law. In Texas, the only law is a 180-day limit for all title loan contracts. If you extend a title loan, the longest you could extend it is that 180 days, after which you’ll need to pay it off in full.

Every time you extend a title loan, you must pay at least the interest and fees on it. Let’s say that you get a 30-day title loan. To pay it off, you’ll need to pay the lender the loan principal plus any interest and fees at the end of those 30 days. To extend it, you’ll pay the interest and fees to start a new term, which will then have a new set of interest and fees for the same amount. How much you pay depends entirely on how long you take to pay off the loan, which means that it’s in your best interest to pay the loan off as quickly as possible.

The same isn’t true with debt on long-term loans, such as business loans, mortgages and auto loans. With these types of loans, the term typically lasts for multiple years and the loan is setup for you to pay it off in monthly installments. You may save yourself some money by paying the loan off more quickly, but this isn’t always the case, especially if the loan has prepayment penalties.

When it comes to title loan debt, you should pay it back as quickly as possible. With long-term loans, you can pay them back on their usual schedule.

Deciding If a Title Loan Is the Right Decision

What about deciding if you should take on title loan debt in the first place?

This will depend on you and your financial situation. Remember that since title loans are short-term loans, you should only borrow them when you need the money for a short period of time. They’re not suited for long-term use, and for that, you’re better off with a loan that has a term of over a year.

Title loans attract quite a few borrowers because they have limited minimum requirements. You only need three items to get a title loan:

  • A car
  • The title to that car
  • A government-issued ID

For a traditional title loan, the car will need to be in your name and have a lien-free title, although there are other types of title loans that get around these requirements. The ID is just to verify that you’re at least 18 years old. If you’re interested in finding title loans online, we have a simple online application on both our homepage and our Apply page. Filling it out is a two-step process:

  1. Enter your car’s information, including its year, make, model, style and estimated mileage.
  2. Enter your full name, phone number, email address and ZIP code.

We will then get in touch with you, provide a title loan estimate for you and look at title loan locations in your area to find you a lender.

The key to deciding whether you should get a title loan is if you can pay it back in full on the due date. You probably noticed that there was no mention of paystubs or banking statements in that list of required items for a title loan, and that’s because income verification typically isn’t part of the application process. No income title loans are common for those in need.

If you’ve only lost your income temporarily and will have money coming in soon, then it’s fine to get a no income title loan. But be careful about getting a title loan that you won’t be able to pay off. You’ll end up extending it or defaulting, neither of which puts you in a good financial situation.

Using Title Loans Responsibly

Title loans can be a great financial tool when you need fast cash. You can apply without going through the typical lengthy application process other lenders have, and you’re likely to get approved. Funding doesn’t take long, either, with borrowers often getting their money within an hour of entering the lender’s office.

You should always think it through before you take on any debt, though. Evaluate your financial situation and make sure that getting a title loan is a sound decision.

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