January 13, 2020
If you live in or near Kansas City, MO and you’re strapped for cash, a popular choice is to get a car title loan. In fact, you may be searching for a ‘title loan near me’ from Overland Park, KS; Gladstone, MO; or St. Joseph, MO right now. Midwest Title Loans in Kansas City is a top choice for getting a loan against the collateral stored in your vehicle quickly and easily.
If you own your car outright, it’s a useful asset that you can use as collateral for a loan. This is also known as a secured loan. You may have noticed that the interest rates for secured loans are typically a lot lower than the interest rates offered for unsecured loans. For example, banks will offer a much lower rate of interest to homeowners who secure the loan against the value of their home. This is because the bank knows that if the lender was to default on their loan for whatever reason, the bank has a good chance of the loan being repaid from the value of the home.
This works the same way with car title loans in and around Kansas City. Any car title loan that you take out will be secured against the value of the car. If you were to default on the loan, the lender has a right to the car so that they can recover the value of the loan.
Are Car Title Loans Large or Small Loans?
In financial terms, we’d typically consider a car title loan a small loan taken out for a short period of time. A car title loan is usually taken out for 30 days. More flexible car title loan companies in Kansas City like Midwest Title Loans allow you to roll over the loan to further months as long as you repay the minimum amount. In fact, you can use your car title loan as a credit line, meaning you’ll never need to pay interest on the loan in the future when you’re not using it.
Do Car Title Loans Require a Credit Check?
Another big draw of car title loans is that they usually don’t require a credit check by the lender. This has a number of obvious advantages. If you’ve had credit problems in the past then they are of little concern if you’re taking out a car title loan. Taking out a car title loan will be a lot faster and simpler than going through the process of getting a loan at a bank, as there’s no lengthy credit check to be performed. Also, every time your credit check is run it drops your credit rating slightly, although temporarily. Running around and getting quotes from places that run your credit rating can put a dent on your credit score.
How Much Can You Borrow on a Title Loan?
As you might expect, the amount that you can borrow depends largely on the value of your vehicle. The Kansas car title loan provider will perform an appraisal on your vehicle and let you know its current market value.
From the value of the vehicle, you can borrow a percentage. You can usually borrow between 25-50% of the value of the vehicle in a single loan. Some providers allow you to borrow more, and each circumstance is different.
The average loan amounts are between $100 and $5,500. However, if you have a more expensive vehicle and the lender allows it, borrowing over $10,000 is a possibility.
Are Car Title Loans Flexible?
Most car title loan providers in Kansas City work on a purely term-based basis. This is analogous to a loan you’d get from the bank in that the loan must be repaid within a certain period of time and the terms of the loan are pretty much set in place.
A more modern alternative approach is available at some car title loan companies in Kansas City like Midwest Title Loans. Instead of simply offering a 30-day loan with a fee, you can instead get a flexible title loan that you can dip into whenever you need it.
A flexible car title loan begins in the same way as a traditional car title loan in that your vehicle is appraised and the amount you are able to borrow against the vehicle is calculated. But from there, your loan contract can run as long as you want, until you close it.
What’s even more enticing is that when your balance on your loan is at zero, you don’t pay any interest at all. If you just need a small amount to get you through the week, you can borrow just the small amount and repay it the following week. The interest on your loan is calculated daily, so the amount of interest you’d need to pay in this case would be much less than a traditional car title loan where you’ve taken out a large amount that you don’t necessarily need.
Many people use a flexible car title loan as their backup, their emergency fund. As we say, it’s there when you need it, and it doesn’t cost you a penny when you don’t use it.
Why Would I Take out a Car Title Loan?
We’ve discussed the what and the how of title loans, but for what reasons are car title loans taken out? Most of the time, car title loans are used for short-term expenses. For example, if you need to get new appliances at short notice, a car title loan can be ideal. Perhaps you have an upcoming student debt that needs to be repaid and you know you’ll be able to work it back over the holidays? Again, a car title loan can be the answer.
There are simply thousands of different ways a car title loan in Kansas City can be invaluable. If you own a car and it’s fully paid off, get in touch with Midwest Title Loans to discuss a Kansas Flex Loan or car title loan in Kansas.