In today's economy, many of us have been completely shut out of the credit system. Banks and credit unions have tightened up lending standards, and credit card companies have stopped approving people unless they have high income and stellar credit. If you find yourself in this situation, but have some equity in your car, then you may wish to consider the pros and cons of car title loans.

A title loan takes the title of your vehicle as collateral for a short-term cash loan. Typically, these loans range in length from two weeks to three months. Also known as an auto pawn, you are basically putting your car's equity up as collateral. Title loans will usually give you a loan amount ranging anywhere from 25 to 50 per cent of your car's equity value.

There are some advantages when credit is not forthcoming from other sources. First, you don't need good credit to qualify - credit checks are not performed by most companies offering a title loan, so if your credit is poor, this remains a route to consider if you have an urgent need for cash.

Another advantage is that income verification is not part of the process either. If you are, for example, a small business owner and have some short term cash flow problems, you know how difficult it can be to obtain credit until you can show 2 years of tax returns. Title loans offer a way around this difficulty, if used correctly and paid promptly.

The biggest advantage is simply the ability to obtain cash fast. When you are strapped or in a short term cash flow crunch, your biggest need is simply to be able to bridge until you have sufficient funds coming again. In this respect, it can be a real life saver.

However, before making a decision, you should consider the cons of them as well. With most loans, you will be paying a pretty large rate of interest - as much as 30% of the loan value in 3 months. So for a 1000 dollar loan, you would have to pay back 1300 dollars at the end of the loan period.

Another con to consider is that if, for some reason you are unable to pay, you will lose your vehicle. Not a pleasant prospect when you need your vehicle to get you to your work or business. And finally, you may have to leave your vehicle with the business that is issuing you the loan.

Are car title loans worth it? It really depends on the urgency of your own situation. While not ideal in many ways, if you have a desperate need for cash, a title loan can make the difference between being crunched, and making it through. Just remember to consider the pros and cons, and choose wisely.

Author Joseph D. Cooper speaks from experience. Several years ago he found himself in need of a car title loan. After researching several companies, he stumbled upon a few key ways to identify trustworthy title loan companies. You can learn more about what he recommends for his personal friends who are looking for title loans.