3 Questions to Ask Before Getting a Title Loan
April 30, 2020 | Daniel Dewitt
A title loan is one of the most dependable fast loans available out there: often from start to finish the process can take as little as a half hour once you’re in a title loan store. It’s one of the many reasons they’re so popular as a way of dealing with emergencies and unexpected challenges.
Before you go out and get one though, it’s worth asking yourself a few questions so that you can get the most out of your title loan. Which questions? Here’s 3.
What Will I Use It On?
This is the first and most important question you should ask yourself, though it may seem obvious. After all, if you didn’t have something to spend it on, why would you take it out in the first place? And while that’s true, it’s also a superficial answer, and one that can cause you to spend money in an undisciplined way on things that aren’t completely vital or don’t fix your problems, or even cause you to take out either not enough, or too much, money.
To avoid this fate, before you go and get a title loan, it’s worth taking a minute to sit down and list out exactly the specific financial challenges you’re facing. Once you’ve done that, rearrange the list with the most pressing costs at the top, and then to the right of the list of challenges right out where the title loan money will go in specific dollar amounts.
This method will keep your brain focused on the specific instead of the abstract, and means you’ll walk into a title loan store with a clear and actionable plan of attack.
Do I Have Everything I Need?
There’s nothing more irritating than driving someplace only to find you’ve forgotten something of key importance and then having to drive back home and then all the way back. It’s a waste of time, which in the case of a title loan abrogates its advantage of being one of the most fast loans out there.
Luckily for you, you’ll need only three things for a title loan: a state issued I.D. like a driver’s license, the lien-free title to your vehicle, and your vehicle itself. The I.D. is to make sure you’re who you say you are, the title to make sure you and only you own your car, and your car itself will undergo a quick inspection to assess its value and the total amount you’re eligible for.
Compared to the mountains of paperwork and background checks that a traditional loan takes, the relatively simple prerequisites for a title loan are a breeze and contributes to their status as fast loans.
How Will I Pay It Back?
While not vital, it’s important for all fast loans to have a plan for how you’re going to pay them back before you take one out. Debt is never fun, and the sooner you can pay it off, the better, right?
The easiest way to figure out how and when you’re going to pay back your loan is to create a budget before you get the loan. While a lot of people find budgets intimidating, they’re actually very simple to create as long as you focus on three numbers: your income, your expenses, and the surplus left after you subtract the second number from the first. The only difference in a budget focused on paying off a loan from a normal budget is that instead of that surplus going towards your savings or luxury items, the surplus is instead immediately routed over to paying back your loan and it’s interesting.
What if after creating your budget you find that you don’t have enough of a surplus to make the loan payments? That’ll make the situation more tricky, but don’t despair. What you’ll want to do in that case is take a look at that list of expenses, and see which can be cut: which are the least important? Which are luxuries you can do without until your loan is paid back? Most of us have at least a little cruft in our budgets that can be snipped away in the short term without too much pain.
If you’re interested in learning how you can save money, we have an article dedicated to just that topic. It’ll walk you through how can save and put away at least $1,000 in a one year span.