February 21, 2019
Getting a loan can be hard for people with good credit, but it is especially hard to apply for a loan when you know have a good chance of getting denied for that loan. Those with fair to poor credit face many more obstacles when it comes to applying, which is off-putting when the chances of being granted a loan with fair to low credit are so much less. 32% of those with less than excellent credit – meaning those with very good and good credit – were denied home mortgages in 2017. Additionally, those who are approved for loans or lines of credit often face higher interest rates than their fellow citizens.
Unfortunately, catastrophe and emergency cash flow issues are not just for those with good credit. When people with lower credit need monetary help, it can feel hopeless as they search for alternate funding sources. The good news is that for those with bad credit, there are options for getting loans. One of the easiest to obtain opportunities is the simple title loan.
What is a Title Loan?
Traditional lending requires a credit score because that is a corporate way of assessing your ability to pay back that loan. In theory, credit tells an institution that you make payments on time and are responsible with your money, but to those who are new at the credit game, understanding credit like this can be dangerous. You might make monthly payments consistently and on time, but if you are using more than 30% of your line of credit, or if you have out too many loans (a reality that almost all college-goers face), your creditworthiness might also be deemed low. In this way, the credit score is not always the best indicator as to whether someone is good with their finances. It does not take into account the rich array of circumstances regarding peoples’ credit choices.
Rather than examining and scoring your financial history, a title loan uses physical collateral in the form of car ownership. A title loan assesses the worth of a car that the borrower owns outright and offers them a fixed loan for the value of the vehicle. When a borrower takes out a title loan successfully, the title loan company holds on to the title until the loan is paid back, in which case the ownership of the car (and the title) are given back to the borrower.
What is a Flex Loan?
For those with bad credit, a flex loan is also an option. Like a title loan, a flex loan uses a car title and worth to offer a line of credit to a borrower. Borrowers go into a flex loan establishment with their title in hand, and the lender provides them with a line of credit. Unlike a title loan, a flex loan allows the borrower to take out different amounts against the loan, up to the full worth of the car. That way, if a borrower wants to take out only a few hundred dollars rather than many thousands of dollars, they have that option. Ultimately, this allows them to pay less interest. Additionally, when the loan is paid back, the borrower has the option of keeping the line of credit open or receiving their title back.
Obtaining a Flex Loan or a Title Loan
Getting a bad credit title loan is easy, but sometimes application terms do vary. Some lenders do allow applications with a lien on the title. Lenders that do this will buy off the car from the lien-holder, and the title loan borrower will then be responsible for repaying the full loan amount and the amount that was owed to the lienholder. Midwest Title Loans does not allow this – to get a title loan with our establishment, you must own your car outright. We believe this ultimately saves the borrower money and time and promotes a good relationship between lender and borrower.
At Midwest Title Loans, borrowers need only to be eighteen years of age, have a running car that they own outright, and fill out one of our online applications before coming in (if you don’t have access to a computer or the internet, you can also fill out one at one of our locations). Once you are approved, we let you know how much we can offer you against your car’s worth and we pay out your loan.
What are the Benefits of Title Loans and Flex Loans?
There are many misconceptions revolving around title loans and flex loans. From people arguing that their interest rates are too high to the people who think title lenders are just out to get people’s cars, many don’t realize that there are substantial benefits of getting a title loan. Here are some of the more common reasons why people get these loans and why they are beneficial overall.
- You can get a title loan in a pinch. There are some instances, like emergency vet bills, car repairs, and house emergencies which cannot wait for the weeks-long traditional loan application process. With a flex loan, lenders come in, are approved, and are awarded their loan in cash all in the same day.
- Title loans take less time to pay off. What critics of the sometimes-high title loan interest rate forget is that title loan applicants are not paying their loans off as long as the traditional loan holder. This ultimately means paying less in interest over the life of the loan.
- Title loans help rebuild credit. It seems almost unfair that the credit industry works in a way that makes it so hard for those with poor credit to restore it. Getting a title loan, making consistent payments toward it, and paying it off on time helps borrowers rebuild their credit and might open up the door for future lending opportunities.
Midwest Title Loans has lending opportunities available to Kansas and Missouri residents with bad credit. With locations in Kansas City, Gladstone, and St. Joseph, Missouri and Overland Park and Kansas City, Kansas, we are committed to getting you the financial help you need. For more information about our locations, or to get started with an online application, contact us for more details.