If you need cash right away to cover an emergency, your options might be limited, especially if you have bad credit. But if you own a car, you’ll always have at least one potential option to consider – so auto pawn loans are definitely worth knowing about.
What is an auto pawn loan?
Auto pawn loans function mostly the same as auto title loans. You put up your car’s title as collateral and get a short-term loan in return. Of course, you have to own the car outright, and the car has to be insured.
The main difference between auto pawn loans and auto title loans is who keeps the car while the money is borrowed. With an auto title loan, you take the money, keep the car, and leave the title. With auto pawn loans, however, you leave both the car and the title.
Consequently, auto title loans are generally the preferred option. But if you don’t qualify for one, or if your state only allows auto pawn loans, the choice is clear.
Top 3 lenders that offer auto pawn loans
If you’re looking for a way to turn your car into some fast cash, here are some of your best options based on SuperMoney reviews.
Located primarily in California, LoanMart offers auto pawn loans and other services in a handful of states. You can get a loan worth up to 50% of your vehicle’s value and generally have a few months to pay it back.
While its interest rates are high, they’re much lower than payday loan rates, which can typically reach 400% or more in annual interest, according to the Consumer Federation of America.
There’s also no credit check required for the auto pawn loans, but you do need to have a state ID and to give the lender your thumbprint to qualify. Learn more about LoanMart’s terms and interest rates here.
Check into Cash
Check into Cash offers both auto title loans and auto pawn loans in several states, though it only offers auto pawn loans in some states.
Again, there’s no credit check required, and the loan terms will depend on where you live. So, be sure to call your local branch before visiting.
Check into Cash doesn’t provide its interest rates on its website, so you’ll need to reach out to your local branch to get more information for your area. Check out SuperMoney’s review page of the lender to learn more.
Ace Cash Express
Based in Irving, Texas, Ace Cash Express has more than 1,400 locations, primarily in the South and Southwest, where they offer auto pawn loans up to $2,000 in many places. As with other companies, you’ll get the cash on the spot.
What sets this lender apart is that if you change your mind within 72 hours, you can cancel the deal. Find out more about the lender here.
Which fast auto loans lender should you choose?
As with any borrower, the right lender for you depends on your situation and where you live. Since these lenders don’t operate in every state, you might have limited options.
To make sure that you’re getting the right deal, shop around and compare interest rates, fees, and other terms. And remember, you’ll lose your car if you don’t repay the loan on time, so you might want to consider a loan with a longer repayment term. Indeed, many observers suggest you consider this lending method only as a last resort.
“You must consider if your bank can loan the money to you, your family, your friends, your credit union, and your credit cards,” says Fred Winchar, president and owner of TMG Loan Processing. “Basically, look at selling a few things if possible to get that cash or at least lower the amount you will be needing.”
But if you find this is something that is best for you, be sure to do your due diligence so you’ll be in much better shape to choose the right lender and the best terms. Once you do, immediately create a plan to ensure you can pay off the loan on time. This ensures that you get the help you need now and that you don’t lose a valuable asset later.
Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.