Did you know that the word motorcycle is from the British inventor Edward Butler? Are you considering a motorcycle title loan, but aren’t sure if it’s right for you?
In this article, hop on and explore all about how motorcycle title loans work. Hop on, ride, and read on to explore why it might be just what you’re looking for financially, and how it can help.
How Do Motorcycle Title Loans Work?
You might be wondering, is it good to get a title loan for my motorcycle? First, it’s important to understand how they work. They use your motorcycle’s title as collateral in order to receive a short-term loan.
How much you can borrow varies from state to state, and depends on your motorcycle’s value. Normally, you’re allowed to borrow up to $10,000. Motorcycle title loans are also known as motorcycle title pawns.
What Are the Benefits?
The benefits of motorcycle title loans include quick funding, lower APR than other short-term loan options, no job requirements, cash loan options, and plenty of credit card accepted. If you don’t have a job, you’ll need to have proof of income from your pension, alimony, government benefits, etc.
Keep in mind that the application does take time, but might be worth it in your situation. Ensure that you avoid debt if you decide to go this route.
If you can’t pay your loan, you’ll be at risk of losing your motorcycle. Before obtaining any loan, make sure that you can pay it off. Motorcycle title loans can be expensive as well.
Secured vs Unsecured Loans
A motorcycle title loan is what’s considered a secure loan. This means that in case you can’t pay the loan, the lender can take your motorcycle. Since they have that option, it’s safer for them than an unsecured loan.
Unsecured loans tend to have higher interest rates because there’s not an item attached to the loan in case you can’t pay. They also have more requirements to qualify.
The benefits of a secured loan include higher borrowing limits, longer repayment terms, and lower rates. Other examples of secured loans include home equity lines of credit, auto loans, and mortgage loans.
Unsecured loans are student loans, personal loans, and credit cards. If you’re not approved for an unsecured loan, you might be for a secured loan.
When they determine if you’ll be approved for an unsecured loan, a lender will look at your capital, character, collateral, conditions, and capacity (current debt and income). Business and personal loans vary.
Before you sign up for a title loan, it’s a good idea to explore the interest rate. They’ll impact how much you’ll wind up paying back. Some lenders look at motorcycles as a luxury item, so might charge you a higher interest rate.
Explore different lenders until you can find one with a competitive rate. You can also explore third-party providers who can help you find lower interest rates online.
How Will You Pay It Off?
Before you take out a loan, keep in mind that the repayment period will be short, and you’ll want to ensure you can pay it off. Plan your budget in advance to ensure that you’ll be able to pay it back. If you’re barely scraping by, you might want to consider a side job or other way to make extra income.
Get More Than a Payday Loan
You can achieve a higher amount with a motorcycle title loan compared to a payday loan. You might find yourself receiving thousands more than if you were to go with a payday loan. Whether your motorcycle qualifies will depend on the lender.
Why Should I Avoid a Payday Loan?
Not only are payday loans expensive, but you might find yourself accumulating debt. The amount you borrow will be far less than the amount you wind up paying back. Another con is that payday loans often require access to your bank account.
They can take money right out of your account. Even if you can’t afford the payment that month, it’ll still automatically come out. Many banks will charge you overdraft fees when this happens.
How Payday Loans Work
If you’re applying for a payday loan, the lender will ask to see your pay stubs or other proof of your job. You’ll also need to have a checking account.
They will then ask you to write a check postdated by 2 weeks of the entire amount. If you don’t pay off the loan within that amount of time, then the lender will cash the check.
If you’re taking out a loan, you might be living paycheck to paycheck, and paying back a loan might not be feasible. This can put you in an uncomfortable cycle of debt. The percentage rates of payday loans can grow astronomically.
What To Do Instead
To avoid a bad situation, it’s a good idea to save a little bit of your check even if it’s a few dollars. Over time, those few dollars will add up. Speak to creditors about any bills that you can’t pay right now, and see your options.
Exploring if Motorcycle Title Loans Are Right for You
Now that you’ve explored motorcycle title loans, you should have a better idea if they’re a right fit for you. Would you like to read more vehicle content? For everything from buying to selling cars, check out our other articles on our site today.