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Title Loan vs. Flex Loan: What’s the Difference?

flex loans in Kansas City

An Overview of Two Types of Short-Term Loans in Kansas City

The financial world can seem like a complicated mystery to most, making applying for any type of loan feel like an overwhelming task. But as the world of lending has diversified over the last few decades, many lending options have opened up to consumers, some of which require little to no credit, and others still that are great short-term loan options. Where we once had to suffer a long application process to get a small loan from a bank, now many short-term loan options are available to you as a consumer.

Two such short-term loans are car title loans and their cousin, the flex loan. In this article, we’ll outline the details of both of these options, what makes them different, and why you might choose one over the other.

Secured vs. Unsecured Loans

First, we should discuss two different types of loans—the secured loan and the unsecured loan. Unsecured loans are simple—a lender will lend you money on the promise that you’ll pay it back. While they have some legal recourse if you don’t pay the money back, it’s still a risk, and therefore interest rates are quite high.

Unsecured loans typically require quite a lot of paperwork as you need to be able to show you have a solid, dependable income. The credit industry handles unsecured loans by using a credit rating system where everyone is given an approximate credit score based on their credit history. It’s an imperfect system that often sees reliable borrowers unable to get credit.

A secured loan, on the other hand, is any loan that you get by putting up collateral. For example, if you own a house, a bank will lend you money up to a percentage of the value of that house. There’s less risk for the lender as if you don’t pay back the money they have a legal right to the secured property or part thereof.

Car Title Loans

Title loans are one of the main types of secured loans. A lender will lend you money based on the value of your real property, which is typically a house, building, land, or vehicle (in this case, we’re referring to your vehicle). The document that shows you own this property is called the title.

When money is loaned through a title loan, the title gets an addendum called a lien. It’s like a note on the title that says the lender has a right to recover the amount of money they loaned you from the property should you fail to repay (which is rare, in most cases). In the case of a car title loan, you can borrow a set amount of money based on the value of your vehicle.

Flex Loans

Typically, at the end of the term of a title loan (when all the money has been paid back), the lien is removed from the title. With a flex loan, you have the option of keeping the lien open so you have instant access to another loan should you need it in the future.

If you choose a car title loan in Kansas City from Midwest Title Loans, this additional flexibility comes at no cost. If you keep the loan open, yet never borrow any money, it costs you nothing. Furthermore, when you do decide to borrow money again on your flex loan, perhaps just for a few days, interest is calculated on a per-day basis.

Why should you care? This means you have access to a revolving credit line you can dip into when you see fit, similar to a credit card. But because it’s a secured loan, you are typically able to borrow more money at a time, and the interest rate might be lower than a credit card.

Title Loan and Flex Loan Requirements

A final benefit of Kansas City title loans and flex loans is how easy they are to get. Because you have a tangible asset that can be used as collateral, there’s much less paperwork to worry about. Lenders like Midwest Title Loans typically don’t even check your credit rating, as the loan will be secured against the value of your vehicle.

To get a flex loan or title loan in Kansas City from Midwest Title Loans, you need to be at least 18 years old. You’ll need a vehicle title that’s in your name and that doesn’t already have a lien on it (this is known as “free and clear”). You’ll also need a photo ID, like a driver’s license. And for flex loans, we need to see some verification of your income, such as pay stubs or a letter of employment.

Title loans and flex loans are very similar, with flex loans just adding another layer of versatility and convenience, should you need an open line of credit. Get in touch with our loan experts today to discuss which option is best for your needs.


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