However, there is sometimes misunderstanding about the difference between pawning a car and getting a car title loan. Some online tools may make it appear that they are the same thing and that you can earn quick cash for your vehicle.
Despite the fact that both allow you to convert your automobile into cash, they are not the same. We want you to know the differences between the two techniques so you can make an informed decision if you ever need money from your car.
Car Pawn Shop
In the same way that a used car dealership buys and sells used cars, a car pawn shop does the same.
You walk out with cash in hand the same day after selling your automobile to us. There are no loan applications, credit checks, or other formalities involved in getting your money. We establish a fair purchase price for your car based on the model year, mileage, wholesale value, and other criteria.
Car Title Loan
Pawning your vehicle is not the same as taking out a car title loan. The only true similarity is that you'll need a clear and free title, which means the automobile can't have any liens on it. The amount you can borrow is also determined by the vehicle's value, which is determined by a variety of factors such as model year, mileage, and so on.
Getting a car title loan is similar to financing a vehicle at a car dealership. Essentially, you're taking out a loan against the vehicle's value. The lender places a lien on the vehicle, but you retain ownership. If you are unable to repay your loan, the lender may seize and sell your vehicle to collect the debt.
Pros and Cons of Pawning Your Car
You must be aware of both the benefits and drawbacks of pawning your car in order to make informed judgments.
Pros
- Get quick cash for your car. When you bring your car into one of our auto pawn shops and sell it to us, you usually walk out with cash in hand the same day.
- Because you no longer own the vehicle, you do not need to worry about maintaining full coverage insurance.
- This is a terrific way to turn cars you don't want or need into cash without having to search for buyers yourself.
Cons
- Because you sold the car, you no longer have access to it.
Pros and Cons of Car Title Loans
Because vehicle title loans are loans, there are advantages and disadvantages to employing this approach to convert your car's value into cash.
Pros
- You get to keep your automobile and continue to drive it while paying off your loan.
Cons
- You're getting a loan and must keep full coverage auto insurance until it's paid off.
- You must give the lender the title and, in most cases, one set of keys in case you default on your loan.
- If you have terrible or poor credit, interest rates on auto title loans may be higher.
- It can take several days to weeks to learn if you are approved for a loan and receive your funds, depending on where you apply.
- You might be forced to keep the vehicle in its current state.
- If you pay late or default on the title loan, your payments may be recorded to credit bureaus, which may have an impact on your credit rating.
- If you cannot provide proof proving you already have full coverage insurance on your vehicle or if you do not pay for it in full through your own agent, some car title loan brokers will demand you to take out their full coverage insurance policy.
Which One is Better?
Which choice is preferable is primarily determined by your existing and future financial circumstances. For example, if you were just laid off and know it would take some time to locate another employment, selling (pawning) your vehicle would be preferable because you would not be responsible for car payments.
On the other hand, if you are still employed but have had a financial emergency, a car title loan may be a better option, as long as you have the financial means to repay the loan within the specified time frame. However, if you need money right away and know you'll be able to "repurchase" your car, pawning can be a better option.
