Banks and credit unions also give out loans, but their procedure is very different from a car title loan or a car equity loan. A car loan comes under quick cash title loans, which take very less time for processing and is for a short-term.
The following are the steps that are followed by banks or credit unions in case you want to buy an asset:
Application: The lender requires an application and will assist the borrower with the same.
Preapproval: After the review of the initial application is complete, the lender provides a preapproval letter that confirms the price of the asset you can purchase.
Processing: Specialists will collect documents to process the loan and the asset that is to be purchased is valued.
Approval: The lender will again review your application and the financial information provided by the specialists. They will either approve or decline your loan request based on their risk analysis.
Loan settlement: The mortgage consultant will work with the borrower to secure title insurance or documents to protect ownership claims.
Closing: This happens when all approvals are made, documents are signed, and money is transferred.
As you see the whole process of applying, getting approvals, getting the correct documents, evaluations etc. take time. If you are in need of quick cash, then a car loan will be of great help. When you apply for a conventional loan it takes longer and even then, there is no guarantee that you will get the money. Also, most conventional loans are for $1,000 or more and if you need a lesser amount the effort required is a lot.
Why a car loan is attractive for borrowers and lenders?
A car loan, whether an equity car loan or a car title loan is a low value, quick processing loan. They are short term loans and do not consider your credit scores (which are considered by conventional loan sources) for approval. If you are the outright car owner, you can go for a car title loan, wherein you handover the title to get up to 50% of the car’s value as loan amount from the lender. The lender can keep your title as collateral for recovery in case of default. You can find lenders for car title loans by searching for car title loans near me and get the details of lenders in your area.
Alternatively, you can go for car equity, wherein the lender forwards money on the basis of the equity on the car. The major difference between car equity and car title loan is that for a car title loan you need to be the outright owner of the car. Equity is the difference between the current value of your car and the outstanding loan balance on it. If you have positive equity, that is, the current value of the car is higher than the outstanding loan amount on it then the lender will base the loan amount on it.
Both types of loans are processed very quickly, require no credit scores and are good options for emergencies.