Can You Get a Collateral Loan For Bad Credit?

If you have bad credit but need fast cash to cover an expense, like a car repair or medical bill, a collateral loan for bad credit might come in handy. It requires collateral, or something valuable you own like a house or car. Here’s everything you need to know about collateral loans for bad credit.

What is a collateral loan for bad credit?

A collateral loan for bad credit is a secured to collateral or an asset you own. This may be a house, car, cash in a savings account or certificate of deposit (CD), stocks and bonds, insurance policies, jewelry, or fine art.

When you apply for a collateral loan, the lender will find out the fair market value of your collateral. This will help them figure out how much money to lend you and what types of terms to offer.

Since collateral lowers lender risk, collateral loans for bad credit do exist and are fairly easy to qualify for. But if you fail to make your loan payments, keep in mind that the lender may seize your collateral.

Types of collateral loans for bad credit

There are many types of collateral loans for bad credit, including:

Title loans

A title loan is a secured loan that uses your car as collateral. You’ll give the lender your car title in exchange for a lump sum of money upfront. The amount you receive will be based on 25% to 50% of your vehicle’s value. Fortunately, you’ll be able to continue driving your car as you pay back a title loan.

Pawn shop loans

If you have an asset like a gold necklace or a guitar, you can take it to a pawn shop and walk out with cash in minutes. Your loan amount will be based on the value of the item you choose to pawn. With a pawn shop loan, you can expect a quick application process and no credit check.

Home equity loans

Home equity loans leverage your home equity (the difference between what you owe on your mortgage and what your home is currently worth). With this type of loan, you get a lump sum of money at once. Then, you pay it back via fixed monthly payments over an agreed term. Home equity loans make sense if you know exactly how much money you need.

Home equity lines of credit (HELOCs)

A HELOC also uses your home equity. You can borrow as much or as little as you’d like up to a set credit limit. HELOCs are a good option when you would like the flexibility of being able to borrow money as you need it.

Benefits of collateral loans for bad credit

There are several reasons you may want to consider a collateral loan for bad credit, such as:

Get quick funding

You won’t have to wait weeks or months to receive the cash. Depending on the lender, you can receive the funds via direct deposit the same day you apply or within 24 hours.

Get better rates and terms

Since collateral loans for bad credit are tied to collateral and pose less of a risk to lenders, they often come with lower rates and more favorable terms than unsecured loans, which don’t require collateral.

Receive a larger loan amount

If you need to borrow a lot of money for a large expense, like a home improvement project, for example, a collateral loan for bad credit is a good idea. You might be able to borrow thousands or even tens of thousands of dollars.

How Advance America collateral loans for bad credit work

Advance America offers title loans that can allow you to receive your funds the same day you apply, even if you have bad credit. To get one, fill out an online application form and visit a nearby Advance America location to get your vehicle appraised. Your loan amount will be based on your car’s value, and you’ll be able to drive your vehicle as you pay back your loan.

How to get a personal loan with collateral for bad credit

If you’re interested in a personal collateral loan for bad credit, follow these steps:

1. Compare lenders

Not all bad credit collateral loans are created equal. Shop around and explore your options. Compare interest rates, terms, fees, and perks so you can choose the right loan for your particular budget and needs.

2. Choose a loan option

Once you’ve done your research, decide on a collateral loan for bad credit. Be sure you can afford to repay the loan you choose, or you may lose your collateral.

3. Fill out an application

Next, fill out the application in store or online from the comfort of your home. Before you submit your application, review it for accuracy to avoid delays with approval and funding.

4. Wait for approval

After you submit your application, you’ll need to wait for approval. The good news is many lenders offer quick approval decisions and may even approve you instantly, so you won’t have to wait days or weeks.

5. Receive your funds

You may receive your money via direct deposit, prepaid card, or check, depending on the lender and your personal preference. You may get the money the same day you apply or within 24 hours.

Get a collateral loan for bad credit today

At Advance America, you can get a collateral loan for bad credit today. Advance America title loans are easy to apply for, and you can walk out of our store with cash in hand the same day you apply. Visit Advance America today to learn more about title loans and start your application.