March 11, 2020
The Big Question: Do Title Loans Affect Your Credit?
What is a title loan? How do title loans in Kansas City work? When can I take out a car title loan? How does a title loan affect your credit? Title loans can be confusing, but once you learn how to get one and pay it back, they start to make more sense. Read on as Midwest Title Loans, the largest car title loan business in Kansas City, answers your questions and more.
Do Title Loans Affect Your Credit?
Car title loans or flex loans usually do not greatly affect your credit. But, as with so many things financial, the answers are not always written in black and white. They can affect your credit if you don’t pay them back, but lenders do not check your credit score before giving you a short-term loan.
There are a lot of things that you need to ask yourself before getting any kind of loan. But, as far as loans go, title loans are some of the simplest and fastest and usually don’t affect your credit score.
How Do Title Loans Work?
Essentially, the process is just as it sounds—you put your car’s title up as collateral and get a percentage of the assessed value of your vehicle as an immediate cash payout. If you default on the loan, however, you can expect consequences, which can include losing your car.
However, a title loan is worth it if you need cash in a hurry and have no other way to get it. A title loan will have minimal effect on your credit, and most title lenders don’t even check your credit score before approving you. Many title loan operators, including Midwest Title Loans, even allow you to drive off in your own vehicle with cash in hand in as little as 20 to 30 minutes.
Before getting any loan, it is essential to stop and evaluate your situation and know that you can pay the loan back before you take it out. Moreover, building credit is a long and challenging process, and repairing bad credit can have an effect on your finances for the rest of your life.
However, sometimes you truly do need money quickly. Title loans and flex loans are very helpful tools when you need to pay unexpected bills or make an important purchase you didn’t have the luxury of saving up for first. Things happen, and title loan companies can help you quickly get out of tight situations.
If you need money now, and know your monthly income will allow you to pay back a short-term car title loan, visit Midwest Title Loans to get started on fixing your current financial situation.
If I Default on the Loan, Will it Affect my Credit?
If you default on a flex loan with your car title as collateral, the title loan company will report your nonpayment to the credit bureaus and will begin the process of repossessing your car. However, a title loan company, like Midwest Title Loans, would much rather you pay your loan back on time than do all the work that repossession entails! Most title loan companies make it easy to pay back your loan and will work with you on a payment plan that will fit your needs.
To ensure you can make your title loan payment, choose a car title loan company in Kansas City that is upfront about all terms of the contract. It also is your responsibility to ensure you aren’t overstretching your budget when you decide to take out a car title loan. Look at your total take-home pay and subtract all your bills from it to find out how much money you’ll have left over to pay back your title loan.
In general, title loans won’t affect your credit rating, but if you choose not to pay them back, they can. Like so many things, you should do your research, read all contracts, and budget your income.
How Do Title Loans Work at Midwest Title Loans?
One of the reasons that many title loan lenders don’t need to check your credit is that they are already getting something solid in exchange for handing you cash—your signed car title. Car title loans are also referred to as secured loans, and your credit is only checked for an unsecured loan (where the lender gets nothing except interest in exchange for a money payout), like at a bank.
Title loan lenders also consider your monthly take-home pay when giving you a loan. Your loan amount is dependent on factors like the value of your car and how much money you earn, so title loan companies don’t need to check your credit score to be able to tell that you’re capable of paying back the money they lend you. Your credit history does not necessarily affect your ability to get money from Midwest Title Loans when you need it.
At Midwest Title Loans, getting a loan at one of our four convenient locations is as easy as one, two, three. One, just bring your car in, along with a clear title, and your photo ID. Two, we will assess your vehicle while info is filled out and exchanged. And, three, you get to drive off with your cash, your keys, and your car.
Midwest Title Loans is one of Kansas City’s largest and oldest title loan companies, having opened for business in 1997. We have helped thousands of customers and offer the most flexible and customer-friendly title loans in the greater Kansas City area, including Overland Park and Gladstone.
We will never subject you to detrimental credit checks or make you fill out complicated paperwork, and we are happy to work with customers with every type of credit. Plus, everything is kept entirely confidential, and all we require is to hold on to your vehicle’s title. Once you pay off your loan, you will promptly get your title back. At Midwest Title Loans, we love to help people get back on track and get the money they need money to get through a difficult time.