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What are the best alternatives to title loans?

What Are Title Loan Alternatives?

Updated on April 15, 2022


A financial obstacle can come up unexpectedly, and it becomes challenging to keep track of all the costs incurred at the wrong time of the month. You may rush to some of your friends and family for help only to return empty-handed, but you need to address financial barriers quickly. So where else should you go? It's a dilemma that happens to most of us at some point in our lives. Fortunately, the solution that the financial market came up with for this type of problem is called a title loan, often referred to as a title pawn. You don't need an excellent credit score with this loan, and you can receive the loan if you have your car title.

Title loans give borrowers money to get out of severe financial trouble. These loans are similar to payday loans and offer financial relief for a short period. The length of the loan can sometimes be as long as 18 months in some states. The only difference between these loans and a payday loan is that the applicant must provide evidence that the car he or she owns belongs to them to use it as collateral. However, to cope with the financial difficulties people don’t have to worry about their credit history in the loan application.

Many lenders have lending agreements announced on their website. Alternatively, the borrower may contact the lenders personally. Nowadays, that can be a difficult task, as the number of lenders has significantly increased. Most online lenders have links with many other lenders. All of these lenders can offer a deal that will meet the needs of borrowers.

Auto title loans are an excellent financing option for people with fast cash needs. Like other financial institutions, interest rates on these secured loans follow the law and are recognized by the government as legal, legitimate, and safe; however, these loans may have higher interest rates, and you may want some other options. Of course, there are many title loan alternatives that may have a lower interest rate for when you are in a financial crisis.

Here's a List of 12 Title Loan Alternatives

Other types of loans that are local title loan alternatives usually require credit checks to determine approval status. These loans are very different from fast title loans, and when you are looking to get money quickly, it is crucial for you to understand how these loans differ so you can decide what option is best suited for your current situation.

1. Payday Loan

A payday loan is a small, short-term loan that can be used to cover expenses until the next payday. You can sign up online and decide to borrow. In most cases, you can complete the entire application online, and borrowed money can be credited to your bank account the same day you apply. A payday loan is an unsecured loan, which does not depend on the guarantee, as the owner of a house or car.

Usually, when you apply at first, you can borrow an amount up to $250. Once you have successfully repaid the loans with a particular company, they can offer to loan you something around $750 in a subsequent loan.

Payday loans can serve as a useful solution for short-term cash flow problems. To qualify for a payday loan, you must be 18 years old and employed with a salary of at least $750 a month. You need to have a bank account with a debit card.

2. Personal Loan or Short Term Bank Loan

A personal loan is a loan borrowed to meet particular needs. Banks or other lending agencies offer this type of loan with an explicit agreement for repayment that states monthly installments and payment deadlines. If you opt for a personal loan, make sure you do some comparison shopping to try and get the best deal that you can, you must also make sure to make payments on time or risk losing your property.

Personal loans can get you money for many reasons, such as remodeling your home, a holiday trip, consolidating debt at a lower interest rate and more. There are two types of personal loans. One is a secured mortgage loan, and the other is an unsecured loan.

3. Short-Term Business Loans

Every business faces ups and downs from time to time. This type of instability or agitation is understandable for every company. You can fill these gaps with short-term operating loans. This loan is especially useful when the sales cycle is longer than the pay schedule.

A business loan is a short-term source of flexible and easy to use a financial resource that allows you to invest a lot in your business and to control the effect it has on your cash flow. With a short-term business loan, there is no need to rely on other credit institutions, such as overdrafts for working capital.

Short-term loans are suitable for new businesses and existing businesses. As for the new companies, some banks will only provide them short-term loans, because they are less risky than loans with longer maturities.

4. Peer To Peer Loans

Peer to peer lending is a form of micro or small personal loan. The loan is not from a bank, but from individual lenders, so it is usually easier to get than those from a bank. The loan is still approved by a bank, which is responsible for various aspects of processing the loan. The lenders use the bank for performing credit checks on borrowers, connecting borrowers to the lenders, loan agreements, and payment management. Peer-to-peer lending is primarily done online instead of the traditional way of meeting with a bank in person. Loans amounts may vary, but often the most you can borrow is $25,000. This makes them ideal for debt consolidation and a good title loan alternatives because the interest rates on these loans are lower than those of title loans.

5. Short Term Bank Loan

Before going to your local title loan lender, you should first try to exhaust your options when it comes to traditional loans at credit unions or banks. These are usually great title loan alternatives as you probably won't have to pledge your vehicle. However, if you aren't able to get a loan from them because of bad credit, there are still other options.

6. Credit Card Cash Advance

Cash advances can be pretty expensive and should be treated similarly to a short-term loan to avoid having interest pile up. Getting a cash advance from your credit card company can be risky if you don't plan out how you are going to pay back the loan in the next couple of weeks. If you decide to go with this option, make sure you are committed to paying back the cash advance before things get out of hand.

7. Loans from Friends or Family

Title loan alternatives could include borrowing money from friends and family if they are willing to help you out when tough times hit. Many times you will be able to get this loan for little or even no interest, or they may also offer to give you the money (although you may want to pay them back in some way if they do). If you have had trouble with paying people back in the past, consider making a written contract or signed agreement with a payment plan that works for both of you. Don't make a habit of asking the same person for money over and over again as it could put a strain on your relationship.

8. Credit Counseling or Debt Counseling

There are plenty of individuals who, at one point or another, have needed help financially. Anyone who is struggling with debt should meet with a certified financial counselor. You can find a credit counselor for free in any state; go to National Foundation for Credit Counseling to see yours. They can help you manage your debt, get a better grasp on budgeting and improve your financial situation.

9. Extra Part-Time Job

If you have the time, consider getting a part-time job. This can help give you a few extra dollars each week to put aside for an emergency fund and to help out with any expenses that you might not have been able to deal with in the past. Even if you need to make money overnight and don't have the time to spend looking for a job at this moment, consider getting another one after this emergency is over and put aside that extra money for the next rainy day.

10. Local Churches and Charities

Many local churches will help you out when you are in need, and this may even include offering emergency cash assistance depending on your circumstances. There are also many different charities that provide help with clothing, housing, food, education and much more.

11. Call your Landlord or Utility Company

If you are going to be late with a rent payment or utility bill or some other loan, you should first try contacting the company that you owe the money to see if you can negotiate a different time for payment. They may give you some more time to pay your bill which can give you that much needed time to scrape together the money you need. (This may not be a valid option depending on your payment history)

12. Paycheck Advance

You may be able to have your employer advance your paycheck. This is only available in some states, and even if it is available, it is still your company's discretion. However, it never hurts to ask your supervisor if this is possible.

Researching and knowing title loan alternatives will allow you to be a more educated borrower. The more options you are aware of can help you determine the loan that is right for you.