Home Curiosity What Is an Unsecured Loan vs. A Secured Loan?

What Is an Unsecured Loan vs. A Secured Loan?

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People With Bad Credit May Find Secured Loans More Convenient

Having a rocky financial history can make applying for traditional bank loans difficult. That’s mainly because conventional bank loans are unsecured– they rely on credit scores when determining approval. A secured loan, on the other hand, doesn’t rely on credit scores; it relies on collateral.

Accessing money quickly can be crucial if you’re struggling with your financial situation. Unfortunately, unsecured loans may not be the best answer if you’re experiencing these circumstances. However, you may be able to receive money the same business day you inquire about secured loans, such as title loans.

Inquiring about car title loans can be simple and convenient, especially if you have a less-than-perfect credit score. Learn more about why this secured option can help you during an unexpected crisis! Apply today for a title loan by filling out this pre-approval form or calling to speak with a title loan representative.

What Is a Secured Loan and How Do They Work?

A secured loan means the money is backed with collateral if the borrower doesn’t repay the loan. This option can be easier to qualify for because your credit score isn’t the main focus of your approval. Some examples of secured loans are mortgages and car title loans– both have physical assets on the line as insurance for the lenders. (1)

Title loans work by allowing a person to borrow money off of the available equity in their vehicle. Lenders place a lien on a qualifying vehicle title and remove it after the funding is paid back. If you struggle financially, this option may be perfect for you since your credit score is not the primary factor in your approval! 

Your credit score will be considered during a title loan inquiry, but lenders care more about the following:

  1. How Much Equity Is in Your Vehicle
  2. If You Have a Steady Income to Pay the Loan Back

During a car title loan inquiry, vehicle equity can affect your approval and possible loan amount! Generally, qualified borrowers may receive anywhere from 25-50% of their car equity estimation in funding. However, this amount can vary depending on your circumstances. Contact a title loan agent if you have questions about your vehicle during the inquiry process!

You also must have proof of a steady income when you inquire about an auto title loan. That’s because lenders want to know if you can pay the money back if you obtain approval. This criterion is a federal requirement to protect borrowers from predatory lending practices! Lenders cannot approve funding without checking income proof first.

What Is an Unsecured Loan and How Does It Work?

Unsecured loans do not depend on collateral for funding, but failure to pay them back can result in lowered credit scores. Since lenders consider your credit history, income, and debts when determining your application for an unsecured loan, it can take more work to get approved.

Some examples of unsecured options include personal loans, student loans, and revolving loans, like credit cards. Not paying back unsecured or secured loans can make your life more difficult. If you miss monthly payments on an unsecured loan, your debt can be sent to a collection agency.

If you fail to make your monthly mortgage payments, banks can foreclose on your home and take your available assets to pay themselves back. Similarly, if you fail to pay a title loan off, lenders can legally repossess your vehicle and resell it to compensate for lost value.

Car repossession during a title loan is not common and is typically the last resort any lender wants to take. If you’re struggling to pay your title loan back, contact the lender immediately to explain your circumstances. You can also set up an automatic withdrawal from your bank account to ensure you never miss a payment!

Inquire About Secured Loan Options Like Title Loans Today!

Only some people make enough income to pay for unexpected expenses. If your money is tight, and you struggle with paying bills each month, you may have a poor credit score. This factor can make applying for traditional unsecured loans challenging.

You can inquire about secured loan options, like title loans, if you have a rocky financial situation! Your credit score will be considered during approval, but it’s not the main focus.

Online title loans could be your answer if you need to access cash quickly. Inquire about title loans today by filling out this pre-approval form or calling to speak with a title loan agent. (2)