While vacations travels can always be postponed (although they shouldn’t be), you may have to pack up and jump on a flight on a short notice due to some emergency that requires your presence.
It could be your best friend’s impromptu wedding, a loved one injured in an accident, or an urgent business meeting. Regardless of the reason, it can sometimes be difficult to pay for unforeseen travel expenses.
You may not have enough room in your monthly budget to include flight tickets and hotel accommodation costs, and you may not be willing to dip into your emergency fund, saving it for worse emergencies. Luckily, you can take out a car title loan to bail yourself out of this financial stalemate.
There are number of benefits of taking out an auto title loan to pay for travel expenses. Here is everything you need to know about them.
How Do Car Title Loans Work For Paying Travel Expenses
No matter the way you try to spin them, plane tickets are never cheap. The average domestic flight seat can cost anywhere from $300 to $800, depending on where you are heading to. The cost can be a lot more (into the thousands) when you are flying internationally.
Not to mention, the high season airfares. You want a loan that is quick, easy, convenient and affordable. This is where car title loans come in to help you out of your financial fix. These are secured loans that take your car’s value to determine the loan amount.
They are much cheaper than other short-term loans like cash advances since the lender is secure in the vehicle’s worth.
These loans require minimal paperwork and do not take much time to process. Car title loans can be afforded by anyone since lenders draw up repayment plans prior to signing the loan contract.
An auto title loan can help pay for your travel expenses so that you enjoy your vacation or be there for people that count on you without worrying about the finances.
However, an important feature to note about secured loans is that your asset can be repossessed to cover loan damages in the event of non-payment. Where auto title loans are concerned, lenders are not interested in repossessing your vehicle since often that comes out to be more expensive.
Rather, they are known to work with borrowers who default on loan payments by creating easy and affordable repayment plans, keeping a borrower’s monthly income and expenses at the forefront.
Auto Title Loan Amounts Can Cover Costs of Traveling
Traveling is expensive and is no cheap feat certainly if you travel like Roman Pearce in Fast and Furious 6 but that is another topic. You don’t just have to come up with the flight tickets, but also lodging, local commute, and pay for food and other sundries.
The average cost of a motel room will often range from between $45-$100 per night depending on where you are traveling to and the quality of the lodgings. This amount can rack up pretty quickly if you stay for more than a few days.
Car title loan amounts can be fairly significant because they take into account the value of your vehicle.
If the car’s current value is around $3,000, then you can get a loan easily for anywhere between $2,000 – $2,500 in as less as 30 minutes.
Car title loan assessors make use of the Kelly Blue Book or KBB to determine the current market value of a car based on the make, model, and year of purchase. Other factors like current condition and mileage are also taken into account while determining this value.
It is important to note that no title loan company shall offer the full value of your car. These loans are secured and the only security a lender has is in the value of the collateral. Hence, most lenders will pay up to 60% – 70% of the car’s worth.
However, you can negotiate to increase the loan amount by convincing the lender that you are not a high-risk borrower. Proving the financial capability to repay the loan usually gets a 10% increase in the loan amount.
Make sure you shop around for the best loan terms because all lenders are not alike. There are no government regulations to determine the worth of a vehicle and lenders can choose a loan amount as they please.
However, some states have put restrictions on the maximum amount that can be borrowed through car title loans. This is to protect borrower interests.
Don’t Let Bad Credit Hold You Back From Traveling
Most people with bad or poor credit scores are unable to enjoy their lives to the fullest since credit is not readily available to them. America is a credit-based economy and its sub-par credit history can make it difficult to acquire a loan or a credit card.
Luckily, car title loans are available to almost anyone who has a clear and lien-free title to their vehicle. Most lenders may not even check your credit score or history.
This is one of the reasons why these loans are so quick. You do not have to postpone your travel plans or worry about a loan being rejected just because you have a below average credit score.
In fact, auto title loans are offered to people as a remedy to repair their credit scores. You can get a title loan with a credit score of even 460. People with good credit scores are offered better interest rates which makes it a preferred option.
Quicker Than Conventional Loans
If you have a good credit score then you can obviously apply for conventional loans from banks and credit unions. While conventional loans definitely come with lower interest rates, they are also accompanied by a lot of paperwork and other hassles, which you can do without while traveling.
They require dozens of documents which can take a long time to assemble. These loans are not quick loans and you may have to wait weeks before you get a response stating approval or denial.
The wait time is enough to make many people re-think applying for traditional loans. Also, personal loans from most conventional banks and financial institutions come with pre-payment penalties.
This means you will have to carry the loan to term (usually for 2 to 4 years) even if the annual bonus comes in and you can pay it off. Further, these loans come with a lot of questions and restrictions.
If your plans to travel are canceled, you may not be able to use the funds towards other pressing expenses, like car repairs or home improvement.
Car title loans on the other hand are fairly quick and can be completed within minutes. You choose the mode of loan disbursal. You can have the money as a check or direct transfer to your bank. You can also choose to have hard cold cash from one of the many lender stores.
Lending companies for auto title loans are not known to interfere with the loan amount. You can use it as you like with no questions asked.
Car title loans typically don’t come with pre-payment penalties. You can repay the loan early if your paycheck comes or if you get the money from elsewhere.
However, all lenders have different policies and it is important that you check with your individual lender about all loan terms and conditions before signing the loan contract.
Short Repayment Plans
Most people worry about the high interest rates involved with car title loans. However, these loans are short-term loans and can be repaid quickly. This prevents interest from racking up which is not good even in a stellar economy with lower taxes.
Typically, auto title loans are only for 30 – 45 days. This means the interest is only for few weeks and when calculated does not amount to much.
Short-term duration gives you the added benefit of becoming loan free quickly. You don’t want to continue paying for expenses from last year’s travels when you are all ready to take a new one.
You can easily use car title loans to pay for unexpected travel expenses or even to cover additional expenses of planned travels.
You Get To Keep Your Car
There are no restrictions placed on your driving the car. The car is yours and you can drive it as you normally would. At max if the loan amount is too close to the car’s total value, a lender may install GPS and starter interrupt device.
This feature of auto title loans differentiates it from most car title pawns and ensures that you are not without a vehicle.
Driving privileges are important when you factor in the amount you will waste on bus fares and taxi fares. It may get even more difficult if you depend on your car to commute to work.
Car title loans are probably the only kind of secured loans where the lender does not insist upon impounding the collateral or placing it in safe-keeping.
Not having to keep your car in a safe warehouse or a garage makes it easier for you to get to work when you come back from your travel. You could also just drive down to your destination if planning a road-trip.