“How are we going to pay for that?” my wife asked me.
I wasn’t sure how to answer the question. We were staring at an unexpected expense that was more than our budget had room to handle — and our emergency fund had recently been exhausted.
We were almost done paying off $109,000 in credit card debt through a debt relief program; the terms of which resulted in our unsecured lines of credit being closed, and us being unable to apply for any new ones until we completed the program. We had to find a solution, and fast.
We applied for a title loan.
When many people hear the term “title loan,” they think of something much like a payday loan. You bring in the title to your car and you walk out with cash, as well as a sky-high interest rate.
By doing some research, we found a different kind of title loan.
Our Vehicle Title Loan
It was essentially taking out an equity loan on the car we already owned. With title in hand, we walked out with an approved loan in under 90 minutes.
Here are some details of the loan:
- Three-year term
- No penalty to pay off early
- 7.9% interest
- Could have borrowed up to the Kelly Blue Book Value of the vehicle
- Needed to own the vehicle outright (no lien holders on the title)
- Secured loan, so it didn’t violate the terms of our debt relief program
We found out these kind of vehicle title loans were offered by two surprising entities: not the pawn shop or the payday loan company, but our bank and our insurance company.
We hated to take on more debt at a time when we were still trying to eliminate our credit card debt, but this was an extreme situation we had to deal with. We were in a bind, and it was a relief to find a legitimate financial product that helped us through a temporary rough spot. Luckily for us, we were able to greatly accelerate our payments and pay it off quickly once we completed our debt relief program.
If you find yourself in a similar financial crisis (and own your vehicle outright), your four-wheeled friend — in combination with your bank or insurance company — just might provide the help you need.
Have you ever heard of a bank or insurance company offering vehicle title loans? Have you had a similar experience?