Differences Between Title Loans vs Auto Equity Loans

Daniel Joelson

Daniel Joelson

Total Posts: 344

Published Date: July 10, 2023

Daniel Joelson has been in the consumer finance space since 1994, he has helped to develop underwriting manuals for the financial sector. With a vast amount of Knowledge in consumer finance, he has been writing articles for all types of loans. With his knowledge, he is able to help many people to answer different financial problems.

If you’re in need of some quick cash, you may have heard of title loans and auto equity loans as possible options. While both types of loans are secured by your vehicle, there are some key differences between Title Loans vs Auto Equity Loans to consider before making a decision. In this article, we’ll break down the definitions of title loans and auto equity loans, their differences in loan amounts, interest rates, repayment terms, and application processes. By the end, you’ll have a clear understanding of which option may be best for your financial needs.

What is a Title Loan?

A title loan is a short-term loan that allows you to borrow money using your vehicle as collateral. To qualify for a title loan, you must own your vehicle outright and have a lien-free title. The loan amount you can receive is based on the value of your vehicle and your ability to repay the loan. The lender will hold onto your vehicle’s title until you repay the loan in full.

Title loans are popular among people who need quick cash and have bad credit or no credit history. Unlike traditional loans, title loans don’t require a credit check, making them more accessible to a wider range of borrowers. Additionally, title loans are typically processed quickly, allowing borrowers to get the cash they need within a few hours or days.

How Do Title Loans Work?

Title loans are secured loans, which means that you must provide collateral to obtain them. In the case of a title loan, your vehicle serves as collateral. When you apply for a title loan, the lender will assess the value of your vehicle and determine how much you can borrow. Typically, you can borrow up to 50% of the value of your vehicle, although this may vary depending on the lender.

Once you have been approved for a title loan, you will need to sign a contract that outlines the terms of the loan. This will include the loan amount, interest rate, and repayment terms. You will also need to provide the lender with a copy of your vehicle’s title, which they will hold onto until you repay the loan in full.

Benefits of a Title Loan

There are several benefits to getting a title loan. First and foremost, title loans are a quick and easy way to get cash when you need it. Unlike traditional loans, which can take weeks or even months to process, title loans can be processed within a few hours or days. This makes them an ideal option for people who need cash urgently.

Another benefit of title loans is that they don’t require a credit check. This means that people with bad credit or no credit history can still qualify for a loan. Additionally, title loans are secured loans, which means that the interest rates are typically lower than unsecured loans, such as payday loans.

What is an Auto Equity Loan?

An auto equity loan is similar to a title loan in that it allows you to borrow money using your vehicle as collateral. However, with an auto equity loan, you don’t need to own your vehicle outright. Instead, you can borrow against the equity you have in your vehicle, which is the difference between the value of your vehicle and the amount you owe on your car loan.

Auto equity loans are suitable for people who still owe money on their vehicle but need access to cash quickly. Like various types of title loans, auto equity loans don’t require a credit check and are processed quickly. However, because you are borrowing against the equity in your vehicle, the loan amount you can receive may be lower than with a title loan.

How Do Auto Equity Loans Work?

Auto equity loans are similar to title loans in that they are secured loans that use your vehicle as collateral. However, with an auto equity loan, you don’t need to own your vehicle outright. Instead, you can borrow against the equity you have in your vehicle.

To qualify for an auto equity loan, you must have a car loan that is in good standing. The loan amount you can receive is based on the equity you have in your vehicle, which is the difference between the value of your vehicle and the amount you owe on your car loan. Typically, you can borrow up to 50% of the equity in your vehicle, although this may vary depending on the lender.

Once you have been approved for an auto equity loan, you will need to sign a contract that outlines the terms of the loan. This will include the loan amount, interest rate, and repayment terms. You will also need to provide the lender with a copy of your vehicle’s title and proof of insurance.

Benefits of an Auto Equity Loan

There are several benefits to getting an auto equity loan. First and foremost, auto equity loans are a quick and easy way to get cash when you need it. Like title loans, auto equity loans can be processed within a few hours or days, which makes them an ideal option for people who need cash urgently.

Another benefit of auto equity loans is that they don’t require a credit check. This means that people with bad credit or no credit history can still qualify for a loan. Additionally, auto equity loans are secured loans, which means that the interest rates are typically lower than unsecured loans, such as payday loans.

Key Differences Between Title Loans and Auto Equity Loans

Loan Amounts

When it comes to loan amounts, auto equity loans typically offer higher loan amounts than title loans. This is because the loan amount is based on the equity that the borrower has in their vehicle, which can be significantly higher than the vehicle’s current market value. Title loans, on the other hand, are typically limited to a percentage of the vehicle’s current market value. This means that if the vehicle is worth $10,000, the borrower may only be able to receive a loan of $2,000 to $5,000, depending on the lender’s policies.

Interest Rates

Interest rates for both types of loans can vary widely depending on the lender, the borrower’s credit score, and the loan amount. However, in general, auto equity loans tend to have lower interest rates than title loans. This is because auto equity loans are less risky for the lender, as the borrower must own their vehicle outright and the loan amount is based on the equity in the vehicle. Title loans, on the other hand, are riskier for the lender because the loan amount is based on the vehicle’s current market value, which can fluctuate over time.

Repayment Terms

Both title loans and auto equity loans are typically short-term loans, with repayment terms ranging from a few weeks to a few months. However, the repayment terms for auto equity loans tend to be more flexible than those for title loans. This is because auto equity loans are based on the equity in the vehicle, which means that the borrower may be able to negotiate a longer repayment term if they need more time to repay the loan. Title loans, on the other hand, are typically due in full within 30 days, although some lenders may offer extensions or renewals for an additional fee.

Credit Requirements

Both title loans and auto equity loans are secured loans, which means that your credit score may not be as important as it would be for an unsecured loan. However, some lenders may still check your credit score to determine your eligibility for a loan. With a title loan, your vehicle’s value is usually the most important factor in determining your eligibility. With an auto equity loan, your equity is the most important factor.

Which Loan is Right for You?

Deciding between a title loan and an auto equity loan depends on your individual financial situation. If you own your vehicle outright and need access to a larger loan amount, a title loan may be the better option. However, if you still owe money on your vehicle but need quick access to cash, an auto equity loan may be the way to go.

Before taking out a title loan or auto equity loan, make sure you understand the terms and conditions of the loan, including the interest rate, repayment terms, and any fees associated with the loan. Additionally, make sure you have a plan in place to repay the loan in full on time to avoid losing your vehicle or getting stuck in a cycle of debt.

Conclusion

Title loans and auto equity loans are both viable options for people who need quick cash but don’t have good credit. While they are similar in many ways, there are some key differences to consider when deciding which one is right for you. By understanding the differences between title loans and auto equity loans, you can make an informed decision that meets your financial needs. If you’re interested in learning more about title loans or auto equity loans or Title Loans For Cars For Sale, contact Company TFC Title Loans today. We’re here to help you get the cash you need, when you need it.

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Disclosures

DISCLAIMER: As our policy to make sure you know what we do and what are our limitations, we offer you these disclaimers. We are NOT A LENDER and we do not make short term cash loans or credit decisions. We are a referral service and work only with licensed lenders/brokers.

We may act as the broker for the loan and may not be the direct lender. Loan proceeds are intended primarily for personal, family and household purposes. We do not offer or service student loans.

*Loan amounts by the lenders vary based on your vehicle and your ability to repay the loan.

*Since we do not lend money directly we cannot offer you a solicitation for a loan, except in the state of California. In all other serviced states we WILL match you with a lender based on the information you provide on this website. We will not charge you for this service and our service is not available in all states. States that are serviced by this Web Site may change from time to time and without notice. Personal Unsecured Loans and Auto Title Loans are not available in all states and all areas.

*Auto Title Loan companies typically do not have pre-payment penalties, but we cannot guarantee that every lender meets this standard. Small Business Loans typically do have pre-payment penalties and occasionally will use your car as collateral to secure the loan.

*All lenders are responsible for their own interest rates and payment terms. TFC Title Loans has no control over these rates or payments. Use of the work competitive or reasonable does not mean affordable and borrowers should use their own discretion when working directly with the lender.

*The amount of people who applied for a loan and we helped and those who received a loan is not the same. We cannot guarantee we will find a lender who will fund you.Just because you give us information on this web site, in no way do we guarantee you will be approved for a car title loan or any other type of loan. Not all lenders can provide loan amounts you may see on this web site because loan amounts are limited by state law and/or the lender. Some lenders may require you to use a GPS locator device on your car, active all the time. They may or may not pay for this or charge you for this. This is up to the lender and we have no control over this policy of the lender. Typically larger loans or higher risk loans use a GPS.

*In some circumstances faxing may be required. Use of your cell phone to receive updates is optional.

*Car Title Loans are expensive and you may have other ways to get funding that is less expensive. These types of loans are meant to provide you with short term financing to solve immediate cash needs and should not be considered a long term solution. Residents of some states may not be eligible for a loan. Rejections for loans are not disclosed to our firm and you may want to contact the lender directly.

*Car Title Loan lenders are usually licensed by the State in which you reside. You should consult directly with these regulatory agencies to make sure your lender is licensed and in compliance. These agencies are there to protect you and we advise making sure any lender you receive money from is fully licensed.

*Trading Financial Credit, LLC dba TFC Title Loans, Car Title Loans California, Dineromax. If you are using a screen reader and are having problems using this website, please give us a call at 1-844-242-3543 for immediate assistance.

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