Every borrower looks for a credit score hike while borrowing loans. The fun side of borrowing an auto title loan is that, the borrower gains a win-win situation. While the lending company does not consider the borrower’s credit score when lending the money, the borrower can utilize this opportunity to raise his/her credit score.
A Credit Score
In a general sense, a credit score is basically a three digit number, generated from a mathematical algorithm and calculated based on your credit history. The main purpose of a credit score is that it is used to predict risk. The risk of a sense of irresponsibility arising from your part during repayment.
So, the better the score, the better will be your credit limit. Probably you must be knowing that anything lower than a score of 550 will get you to the rejection list. You will be permanently rejected when you are seeking to qualify for any type of financial or credit loan. Credit scores are time taking to score. However, an auto title loan will help you to solve the problem and pay off your debts.
Solving With Auto Title Loan
Firstly, when saying that an auto title lending company does not look at your credit score. It means that they look at your car’s value.The value of your car determines the amount that they are going to lend to you. Your car becomes an asset that puts you through in the direction of the credit line. This is a great way to borrow credit in case if you are facing bankruptcy. The company does not consider your credit history to see whether you are eligible or not.
Using your car as a lien against your loan means that if you are unable to repay the amount borrowed, then the company takes away your car as a repayment. What is great in case of this is that, you get good options to repay your loans. Your monthly income will be your base on which your repayment option will be made.
Credit Your Limit
When you take out a title loan, you will expect two things –
- Low Monthly Payment, and
- Low Rate of Interest.
So if you are looking for a way to obtain a high credit score, then auto title loan is a great step to go ahead. It makes things hassle free especially if you have a large amount of debt that needs to be partly cleared off. It is very simple. Just walk up to any local auto title lending company or simply give them a call to apply for. It will hardly take you twenty minutes to get your loan.
Credit Points To Consider
However before consider going ahead for the loan, it is always advisable to consider the legal terms and conditions that you are committing to.
Always check how the interest rate is being calculated. You should also check the time period during which the rate of interest is considered. Suppose if you are told by the company that you will be charged an interest of 3%, at first it might seem okay to you. However, once you start reading their paper work, you will find a different meaning altogether. You might find that an interest of 3% per month will annually turn up to be 36% per year.
Keep in mind that auto title lending companies belong to a category different from credit card companies or banks. Hence, you will be subject to an interest of higher rates.
Make sure you have got all your doubts cleared before signing on the consent paper. Ask specifically about the additional penalties for late payment.
The potential risk here is losing your car to them. Concluding that your credit limits were the least to worry about. Remember these factors and enjoy clearing your debts.
Author Bio: Cayla Silverstone is as a Financial Analyst by profession. She lives in the United States and had worked with some of the leading auto title loan lending companies. She is also very passionate about cars and in her free time she enjoys giving advice to people regarding auto title loan.