Are You Trying To Start A Business With Bad Credit? Here Are 3 Reasons To Consider Using An Auto Title Loan For Quick Funding
If you're starting a business and have a bad personal credit score, you've probably found it difficult to raise startup funds. A new business doesn't have a track record of revenue or a business credit score, so lenders typically look at your personal credit score to determine how risky investing in your business will be for them.
If you're struggling to find funding and own your vehicle, you should consider taking out an auto title loan to secure some startup funding. These loans use your vehicle as collateral, and lenders will loan you startup funds based on how much your car would be worth if it was sold. Below, you'll find three reasons to consider using an auto title loan for business startup funding when you have bad credit.
1. Your Credit Score Typically Doesn't Matter for an Auto Title Loan
Most auto title loan companies don't even check your credit score when you apply. All they want to see is proof that you have a clean title to a vehicle that your fully own, which can be anything from a small car to an RV.
The reason why these lenders don't care about your credit score is that the loan is a very small risk for them. It's a secured loan that uses your vehicle as collateral, so they know that they'll be able to recoup the money that they lend you when you either pay the loan back or they take ownership of your vehicle after you default. If you're having trouble securing funding for your business due to bad personal credit, then an auto title loan gives you a way to raise capital by simply using your vehicle as collateral.
2. Your Business Will Receive an Immediate Influx of Cash
Auto title loans are processed very quickly, which is a big difference from applying for a personal loan or a business loan. Business loans require you to fill out an enormous amount of paperwork and provide ample documentation to your prospective lender, such as your financial statements and your business plan. The process of securing a business loan can take weeks or months.
With an auto title loan, all the documentation you need to provide is the title to your vehicle. Once the lender has checked the title, you'll receive the funds that you need for your business. When your business needs funding immediately, the sheer speed of securing an auto title loan is a great benefit.
3. You Have the Option of Extending Your Loan Terms
As a secured loan that uses your vehicle as collateral, you'll surrender ownership of your title to the lender as part of the loan. If you default on the loan, they have the right to repossess your vehicle and sell it in order to pay off the amount you owe to the lender. However, most auto title loan lenders will give you the option of rolling over your loan term instead of immediately seizing your vehicle.
You'll have to pay additional interest and fees in order to roll over the loan, but it gives you some safety in case you have difficulty paying the loan back. It may take a few months for your business to begin generating reliable income, so the ability to extend the loan terms helps to protect you from having your vehicle repossessed.
Overall, auto title loans are a great way to secure some immediate funding for your business startup. You'll have to take on the risk that your vehicle will be repossessed, but it gives you the chance to receive the funding that you need even with a bad credit history. If you're starting a business and own a vehicle, consider using an auto title loan to help you get the startup capital you need.