If you have a poor credit rating and you need cash instantly, you may feel like there are no options out there for you. However, if you use your vehicle as collateral, you could apply for an auto title loan. Emergency situations often require cash fast, and these types of loans can help with that. Not just that, however, but if you have a poor credit rating, these loans can even help you rebuild your credit.
Auto Title Loans to Rebuilt Credit
Credit bureaus look at your past financial history to determine whether or not you are a suitable candidate for a loan. How you use your credit in your most recent past generally weighs the heaviest. When you apply for some of the best auto title loans Texas has to offer, however, your credit history will not be as important, if at all. Yet, if you make all the payments as and when needed, your credit report will immediately improve.
Different Types of Car Title Loans Houston Options
In most cases, an auto title loan is a short term solution that you pay back after a month. Some, however, allow for more flexibility in terms of repayments. Indeed, there are even loan providers that allow you to pay back the money you borrowed, plus interest, in two years.
However, the ones with a short length are the best for rebuilding your credit history. This is also better because you will pay less interest. Unfortunately, very high interest rates are charged on these loans.
Plan to Rebuild Your Credit
If you do want to use a car title loan to rebuild your credit, there are a few things to be aware of. Firstly, it is best if you do not spend the cash principal, instead choosing to put it in a savings account. This makes your finances look better.
Next, always pay back the amount you borrowed on time. Better still is to pay it back early. This is another reason why you shouldn’t spend the principal, because this could leave you with repayment difficulties. Yes, you can roll your loan over, but this means you still have to pay the interest and that you will be in the same situation at the next repayment date.
Make a real plan about how you intend to rebuild your credit. Obtain a copy of your credit report and take a look at some of the things that weigh heaviest on your credit file. Save up to make sure you make payments on those. You will probably have to learn to spend a bit less money, so that you can get rid of your debts as quickly as possible. Consider that a title loan has to be repaid in a month, so think about how much you can actually achieve in that month. It may be better to wait a little while before getting a loan, so that you can make one big cleanup of your credit file instead.