Can Car Title Loans Damage My Credit?
Understanding How Car Title Loans Work
In today’s lending world, credit history and credit score are everything. Some people will shy away from a car title loan believing that it may damage their credit. But, can a car title loan hurt your credit rating? Any damage that might occur depends on the borrower. First, it helps to understand how a car title works.
What Is a Car Title Loan?
A car title loan is a short-term loan where a borrower uses the title to a vehicle as collateral in exchange for a loan. Embassy Loans is a well-known title loan company that has helped tens of thousands of individuals access much-needed cash using their cars or trucks as collateral.
How Do You Obtain a Car Title Loan?
The process is pretty simple. An interested party fills out an application to begin the process. At Embassy Loans, applications can be completed in person or online. Applicants will have to submit certain forms of documentation to prove their identity and that they do indeed own the car used as collateral. Once verified, the lender can appraise the borrower’s car for value and the final loan agreement is drafted. The entire process can take as little as an hour.
Does a Car Title Loan Affect Your Credit?
Since a car title loan is based on collateral, there is no need to check a borrower’s credit history. The process is therefore quick and simple. Unlike traditional bank loans, there isn’t a lot of paperwork involved, and the loan approval doesn’t depend on your credit score. This is one of the major advantages of a car title loan, especially for borrowers with low credit.
When Can a Car Title Loan Hurt Your Credit?
Once the loan is approved and the borrower receives the funds, it’s important to follow the loan terms to avoid credit damage. A car title loan can negatively affect your credit if you fail to make payments or default on the agreement. In such cases, Embassy Loans has the right to repossess the vehicle to recover losses.
However, repossessions are rare. Most borrowers repay their loans on time, which can actually improve their credit. Making consistent, on-time payments has a positive impact on your credit score.
