Taking out a Wisconsin title loan is a great option for many people who need money quickly or who have bad credit. However, before you apply, it’s important to understand the pros and cons of doing so. An auto title loan operates like any other loan. You borrow money from a lender in exchange for a fixed payment each month for the length of the loan. Unlike a traditional personal loan , however, this payment doesn’t go toward repaying the principal balance on your credit card. Instead, it goes toward paying off the loan principal as well as interest. Listed below are some things you should consider before taking out an auto title loan to help you make an informed decision:

Should You Take Out An Auto Title Loan In Wisconsin?

Before you jump into borrowing money from an auto loan company, consider whether it’s really the best option for you. Here are a few questions you can ask yourself to help you figure out if this is the right option for you.

What are your current financial obligations? If you have other debts such as a mortgage or car loan, an auto title loan may not be the best option for you. Instead, you may want to consider a different type of funding to help you clear your other debts. Without dealing with your other debts, an auto loan may make it harder to move on to a more affordable home at a later date.

How much do you need right now? While you can take out a loan up to the maximum amount allowed on your credit card, you may be better off borrowing a smaller amount that covers you for a specific period of time. The amount you borrow will be less, but it’ll also be less because you’ll be paying it back.

What Are The Pros Of An Auto Title Loan?

Getting Wisconsin title loans is a good way to get instant cash – With an auto title loan, you receive an immediate cash infusion. Once the loan is approved, the lender will wire the funds to you. This can be especially helpful if you need cash to pay for a new car, repair a vehicle, or for emergency expenses.  Secondly, access to lower interest – Unlike a credit card loan, you don’t have to pay interest on an auto title loan. Instead, you pay the loan amount plus interest. This can be a great way to get money at a lower rate of interest while still having the option to pay off the loan quickly. Lastly, staying on your current payment plan – With an installment loan such as an auto loan, you’ll continue paying off your credit card. This can help keep your credit score high while you pay off the loan.

What Are The Cons Of An Auto Title Loan?

Higher interest – Even though you’re only paying the loan amount plus interest, the cost of borrowing can still add up. Depending on your interest rate, this could cost you thousands of dollars in interest over the life of the loan.

High monthly payment – With an installment loan such as an auto loan, you’ll be making a high monthly payment. Depending on your interest rate, a high monthly payment can be enough to pay off your credit card in less than 10 years.

May damage your credit score – If you take out an auto loan to pay off your credit card, this may damage your credit score. Depending on the amount of the loan and the length of the repayment plan, this could seriously harm your ability to borrow in the future.

Final Thoughts

Before you apply for an auto title loan, it’s important to understand the pros and cons. This will help you make an informed decision about whether it’s right for you. If you need money right now, a Wisconsin auto title loan is your best option. However, keep in mind that it comes with lots of drawbacks. Be sure you can handle the high interest and high monthly payment, and that you’re able to repay the loan on time.