If you are in a tough spot and are thinking of getting a loan then you need to ponder upon your options. A lot of people always feel confused between personal loans and auto title loans Houston TX as they are the most common financing choices. Both of these loans have their set of benefits that can work in the favor of some or not. No wonder choosing between can be a daunting task but the one thing you need to do is gather the right information about them.
It is essential to know completely about personal loans as well as car title loans so that you can get to which one works the best for you. However, most people choose car title loans because of the benefits it offers in comparison to personal loans. Plus, there is no long waiting involved in it.
Know about personal loans
Just like any other loan option, personal loans allow the borrower to have some money from the bank in a lump sum. This money can be used at their discretion which is for vacation, renovation, etc. Also, personal loans secure something of high value to offer you money like your home or vehicle.
This can be later seized by the lender to recover the losses if you are unable to repay the borrowed money. These loans have certain loan terms as well as the interest rate which you need to agree to. Personal loans are unsecured loans unlike equity loan on car which are secured loans.
Moreover, personal loans can take a lot of time to approve. There is no guarantee of getting the money within a few weeks. Thus, if you are in an extremely poor financial situation then a personal loan is not the right option for you.
Interest rates of personal loans
If you are new to the loan world then it is essential to know that unsecured loans are known to have a high-interest rate as compared to title loans where some collateral is attached. Also, there is a lengthy process of approval which involves high credit history. It depends on your credit score whether the interest rate or amount of the loan will be favorable or not. In other words, the greater the credit score, the lower will be the interest rate and the higher will be the borrowing capacity, and vice-versa.
Pros of personal loans
- There is no restriction on fund spending
- Flexibility with payment structure
Cons of personal loans
- Higher interest rates
- High risk of bankruptcy
- You need to have a great credit score and if you have a poor credit score then you won’t qualify for the loan.
Know about car title loans
For the people who cannot qualify for personal loans, auto title loan Houston TX have been a blessing for them. You can simply get a loan against your car equity. In other words, you need to keep your car as collateral to borrow the money. There is no requirement for a great credit score or credit history to qualify for title loans.
Moreover, you can simply apply for it by submitting your documents to the lender. As soon as you submit your document, the process starts and you can even get a loan the same day. However, if you are unable to repay the borrowed money then the lender can repossess your car. But to determine the interest rate as well as the terms of the loan you need to get in touch with the best lender. Overall, these are secured loans as compared to personal loans.
Interest rates of car title loans
If you are wondering what are the interest rates of an equity loan on car then you should know that the lender has financial control over everything. With these secured loans there is a low risk of bankruptcy and the interest rate is also lower than expected. Also, some lenders have fixed interest rates which makes it easy for the borrower to decide whether they want to opt for this loan type or not.
Terms of car title loans
There are certain terms of car title loans just like personal loans. But car title loans have flexible terms which can also be changed by having a conversation with the lender. However, if the term is shorter then the monthly repayment will be higher and vice-versa. Also, your credit score or credit history will not stand between anything. It doesn’t impact your interest rate or the terms of auto title loan Houston TX.
Pros of title loans
- Low-interest rate – Title loans have a low-interest rate as compared to personal loans which can work in your favor in the long run.
- No consideration to credit history – Whether you have a great or poor credit score, it won’t affect your title loan. You are still eligible to apply for it.
- Convenience – As compared to personal loans, title loans are more convenient and can help you get out of emergencies.
- Fast approvals – Title loans are known to have fast approvals. Unlike personal loans, you don’t have to wait for months or weeks to get approved. As soon as you submit your documents you can get the loan.
- Minimal requirement of documents – Another benefit of title loans is that you need to collect a pile of documents to get them. You simply need to submit minimal yet important documents to the lenders like ID proof, residential proof, income proof, etc.
- Same-day loan – The best benefit of an equity loan on car is that you can them the same day you apply for it. You don’t have to wait very long to get them.
Cons of title loans
- You need to have your car to apply for a car title loan.
The decision between personal loans and car title loans can be tough. But after considering all the points, car title loans dominate the game. They allow you to enjoy the best of benefits whereas personal loans don’t offer much. However, the ultimate decision should be yours after considering everything.