Car Title vs. Registration Loans
If you’re in need of temporary financial relief, car title loans and registration loans are two options to consider. While a title loan uses the title of your vehicle as collateral, a registration loan does not. Let’s take a closer look at car title loans and registration loans so you can choose the right one for your situation.
What is a Title Loan?
A car title loan is a secured loan that uses your car as collateral. To take one out, most lenders require that you own your car. After you get approved for a title loan, you’ll give the lender your car title in exchange for a lump sum of cash. The amount you receive is typically based on the value of your car. You will be able to drive your car as you repay your title loan.
What is a Registration Loan?
With a registration loan, you use your vehicle’s registration to borrow money. Lenders may approve you for this financing option even if you don’t own your car outright. The amount you receive will be based on your income and the most recent value of your car. Upon approval, you can continue to drive your vehicle and pay off your car loan whenever you’d like.
What are Some Differences Between Title Loans and Registration Loans?
There are some noteworthy differences between title loans and registration loans including:
Title Loans are for Vehicle Owners
To take out a title loan, you must own a paid off vehicle. If you still owe money on your car or don’t own one at all, this option is not available to you.
Title Loans Allow You to Take Out a Larger Loan Amount
Compared to auto registration loans, car title loans offer larger borrowing limits. You may get approved for anywhere between 25% to 50% of the value of your car.
Registration Loans Can Come with Higher Interest Rates
Since you don’t have to use your car as collateral, registration loans are more risky to lenders than car title loans. This higher risk leads to higher interest rates that can cost you hundreds or even thousands of extra dollars.
What are Some Similarities Between Title Loans and Registration Loans?
Some of the most significant similarities between title loans and registration loans are as follows:
You Don’t Need Great Credit to Get Approved
If you don’t have the best credit score, no worries. Both title and registration loans have lenient credit requirements. Your chances of approval are high, even with fair or bad credit.
You Can Pay Off Your Loan Early Without Facing Penalties
You may receive some unexpected cash such as birthday money or a bonus at work. If you put this money toward your title or registration loan and pay it off early, you won’t get penalized.
You May Be Able To Apply Online
Some lenders that offer car title loans and registration loans have an online application process. You can apply (and get approved) from the comfort of your own home.
Which Loan is the Best Option for You?
If your goal is to take out a larger loan with lower interest rates, a car title loan is likely your best bet. On the contrary, if you don’t own your car and are only looking to borrow a bit of money, a registration loan may be a better option. Before you make a decision, consider your car ownership status as well as how much money you need.
How to Get a Title Loan
Advance America offers title loans that can allow you to receive your funds the same day you apply. All you have to do stop by an Advance America location to fill out an application and get your vehicle appraised. Your loan amount will be based on your car’s value and you’ll be able to drive your vehicle as you repay your loan.