Pros and Cons: Title Loan or Sell Your Car

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[By Jennifer Bay]

Are you having financial difficulties and deciding on which is best: to take a title loan or to sell your car? Well, it all depends on your situation regarding what route you should take. One major consideration is, do you need your car, or were you considering on getting another one soon. This alone could persuade your decision. Here are a few other things to consider.

Title Loans Provide a Short Term Solution

Title loans provide short-term solutions to your financial situation. You take the loan and must make the agreed upon payments on the loan. The agreement is that if you miss a payment, the title loan lender can repossess your vehicle, add late payments, or both. In exchange for the title loan, you do have immediate access to the cash you need.  Title loans are not traditional installment loans and can come with really high interest rates.

If You Default on Your Title Loan, You Could Lose Your Car

If you are in a situation living paycheck-to-paycheck, title loans is risky if you need your vehicle on a day-to-day basis. You may depend on it to safely transport your children or to get to work. Losing your car unexpectedly could place you under major stress.

Selling Your Car Leaves You without a Dependable Means of Transportation

Make sure you have a plan before selling your car if you need it for work or your children. Could you place your job at risk if you are late too often from taking public transportation? There are a few things to calculate:

  • How much will public transportation cost
  • How many bus or train transfers will you deal with
  • Does the public transportation schedule meet your needs
  • Is there a stop near your destination

Selling Your Car May Provide a Long-Term Solution

The advantage of selling your car is that it can be a long-term solution. For instance, you get the cash you need to take care of your financial situation. There are no repayment terms to worry about. However, a few disadvantages come with this.

One disadvantage is that you are without a car until you can replace it. If public transportation is an option for you, selling your car should not be a problem. Your second disadvantage is that, you are not guaranteed to sell your car when you need the cash. You may run into buyers who are not serious, and they could waste your time or price haggle you.

Have Help in the Future with Title Loans

If you need to keep your vehicle, title loans are helpful for future financial situations. If you have less than perfect credit, title loans provide a means for you to always access cash. You will still have your vehicle to get around with by taking a title loan as long as you pay the lender on time.

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