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What is a title loan & how does it work?



car title loan
(© Vitalii Vodolazskyi –

Have you approached conventional lenders to meet your short-term financial requirements? Yet they have turned your loan application down given your bad credit score? When established sources of finance fail, a title loan is what helps you in unforeseen finance-related situations. Over the years, it has become one of the secured loans worldwide. A title loan allows a borrower to get funds using his car title as collateral. In such credit sources, the lender takes into account the vehicle’s value and condition. Generally, title loan companies work with financial institutions that enable borrowers to avail loans. The best part about a title loan is that it is time-saving compared to other traditional options of finance. More often than not, the borrower receives an approved sum of the amount in his bank account within 24 hours.

Understanding the pros and cons of a title loan from the borrower’s point is a must before you get started. To make it easier for you, we have put together major benefits and downsides of this mode of finance:

Advantages of title loans

  • Car title loans do not follow cumbersome procedures. All you have to do is fill up an application to apply for the loan. Once done, it is either immediately accepted or accepted later with additional facts and details.
  • Borrowers with bad credit scores are also eligible to apply for title loans. Generally, the lenders are willing to offer loans if your financial statements show that you have a steady source of income.
  • Given that the lender puts a lien on the title of the car, the borrower has no restriction to use it. However, if the latter makes default in the payment, the lender takes over the possession of the vehicle.
  • It is an ideal and quick way to meet your financial obligations in the short term.

Drawbacks of title loans

  • Usually, title loans have an interest rate of high value. But some state laws such as title loans in Texas laws discourage lenders from charging an unreasonably high rate of interest on the borrowing amount.
  • Failure to make timely loan payments can attract additional fees and reductant charges over and above the loan balance. Thus, it is recommended to gain the trust of lenders to avoid such situations.

How does a title loan work?

The prerequisite to title loans is a loan application that consists of essential details about the borrower and the vehicle. Along with the application, you have to get the car, identity proof, pink slips to prove the car’s ownership, and other necessary documents like a driving license and bill of sales. Once the application is complete in all aspects, it is forwarded to the auto loan company. Following the approval, the agreed sum of money is credited to your bank account. Most lenders obtain information regarding your sources of income and monthly expenditures from your financial statements. If you are self-employed or a salaried person, your chances of seeking loan approval are more. The amount of money you can borrow depends upon the state and value of your vehicle. Usually, such loans are repaid within 30 days. But there is a concept called rolling over the loan that allows you to borrow the money for an additional one month with the lender’s prior permission. However, repeatedly rolling over the loan may result in non-payment of the loan amount. This could lead to repossession which means that the lender would retake the vehicle’s possession. Now the lender can sell off the car to fulfill his outstanding debt.

If you have plans to go for this option of finance, make sure to find a title loan company that is registered and certified under the laws of the state. With a plethora of title pawn firms, it is not easy to get one such company. However, with a bit of research, you can connect with an auto loan organization that provides you loans as and when you need them.

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Dave says: If you need a cosigner, you're not ready – Northeast Mississippi Daily Journal



Dave says: If you need a cosigner, you’re not ready  Northeast Mississippi Daily Journal

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How to improve your credit score in 2021: Easy and effective tips



If you’ve ever wondered “What is my credit score?” it’s probably time to find out. Having a good credit score can make life a lot more affordable. If you’re about to buy a house or car, for example, the higher your credit score is, the lower your interest rate (and therefore, monthly cost) will probably be.

Your number may also be the deciding factor for whether or not you can get a loan and ultimately determine if you are even able to buy something you want or need.

So, yes, the goal is to have the highest possible credit score you can, but increasing the number doesn’t just happen overnight. There are important steps to take if you want to increase your score, and the sooner you start working on it, the better.

“If you’re trying to increase (your credit score) substantially to accomplish a goal, you’re really going to have to have as much lead time as possible,” said Thomas Nitzsche, director of media and brand at Money Management International, a nonprofit financial counseling and education provider that advises people on how to legally and ethically improve their credit score on their own.

If you have fair credit and you’re trying to improve the number for a house purchase, for instance, you’ll want to start working on it at least a year in advance, he explained to TMRW.

But even though that sounds like a long time away, you can (and should!) start doing things right now to bump that number up. Below, see seven things you should do — and not do — to help improve your credit score:

1. Review your credit report

Review your credit report and look for errors that might be hurting your score. Morsa Images / Getty Images

The first thing you’ll want to do is pull up a copy of your current report so you know where you stand. You can get free reports from all three agencies — TransUnion, Experian, and Equifax — at Nitzsche said it’s important to take a moment and understand the financial snapshot of where you are today and where you want to be.

You’ll also want to take some time and look for any errors on your report, which could negatively impact your score. “If your name is misspelled, that’s not going to hurt your score,” he explained. “But if you see a late payment or missed payment (that’s in error), or maybe you have an account that should be reporting but isn’t, then that’s a problem and that will impact your score.”

If there is an error, you should dispute it and try to provide as much proof as you can.

One other thing: You can also ask a creditor to remove an issue if it’s been corrected (i.e., if you paid off a collection debt). Nitzsche said it doesn’t hurt to ask and the worst thing they could say is no.

2. Have good financial habits

“The biggest part of your credit score is payment history, so the most critical thing is never missing a due date,” Nitzsche said. Set up a monthly autopay or add all due dates to your calendar so you never miss a bill.

You can also achieve a higher score when you mix different types of accounts on your credit report. It may seem counterintuitive to get extra points for having debt in the form of student loans, mortgages and auto loans, but as long as you’re paying them off responsibly, it shows that you’re reliable.

3. Aim to use 30% or less of your credit at any given time

Know your credit limit and aim to only use 30% or less of it for a better credit score.Tim Robberts / Getty Images

Know your credit card limit, and try not to use any more than 30% of that number each month, otherwise your score could lose points for too much credit utilization.

Another thing you can do is ask your bank to increase your limit. “That will give you more flexibility to spend more,” Nitzsche said. You could also pay it off twice a month to keep the balance low. But he does warn that you never know when the balance is going to be reported to the bureau. It can happen at any point during the month, so it might be the day after you make the payment or the day before. “You don’t necessarily want to use the card and pay it the next day because that doesn’t give the bureau the chance to know that you’re using it,” he said.

4. Avoid requests for new credit

If you’re looking to increase your score around the time you want to buy a house or car, you won’t want to open up a new line of credit, like a retail card, credit card or loan. That’s because “hard” credit inquiries like those can lower your score, and sometimes it comes down to a few points over whether you’re approved or what your rate will be, Nitzsche said.

“Soft” credit inquiries, like when an employer checks your credit or when you pull your own report, won’t affect your score.

5. Keep all accounts open, even ones you don’t use anymore

Even if you don’t use that credit card from college, it’s a good idea to just keep it open because closing it could hurt your score. Nitzsche explained that you’ll be dinged some points for each account that is closed. If you want or need to mentally break up with a card, just cut it up instead.

6. Build your credit if needed

If you haven’t established credit yet, you might not even exist … in the credit report space, that is! “If someone has never fallen in delinquency on any subscriptions or utilities or never had collections on anything and they have not utilized credit cards or loans in the past seven to 10 years, they may not have a credit profile at all,” Nitzsche said. “That presents a challenge when you want to buy a home.”

If this sounds familiar, you may have to get a secured credit card where you put down a deposit, he advised. “You still have to make payments and use it responsibly. Not all banks offer them but you can usually check with your local bank or credit union.”

7. Reach out for help

If you want personal guidance on boosting your credit score, make an appointment with a credit counselor.kate_sept2004 / Getty Images

There are many apps and credit-monitoring services that can help you stay on top of your credit score. You could also reach out to a professional credit counselor who can help you navigate your specific situation. (Here’s a good resource about finding a reputable service.)

One last thing: Nitzsche warned that everyone should beware of credit repair scams that claim to be able to increase credit scores for an advance fee to get accurate negative information removed (even temporarily) from credit reports.


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Lifestyle News | ⚡How J&G Credit Recreations Assists Individuals to Gain Financial Stability Through Credit and Homeownership – LatestLY



Lifestyle News | ⚡How J&G Credit Recreations Assists Individuals to Gain Financial Stability Through Credit and Homeownership  LatestLY

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