A title loan is a loan that is often easier to get than a traditional loan, but you offer the title to your vehicle as collateral for the loan. The way the loan is handled allows you to get money quickly if you own your vehicle outright, but there are risks with a loan like this, so you need to understand how it works before you consider it.
If you're in a pinch and need cash right away, an auto title loan is one way to get money quickly. The loan is based on the value of your vehicle and in the condition of it. In some states, you also need a credit check, but that varies, so check your state regulations to clarify that.
Because the loan is based more on the car and less on you, the loan company can run through the process pretty quickly, and often you can get the cash you need the same day. They will check the value of the car, look at it and assess the condition, and offer you a loan amount.
Surrender Your Title
Because your title loan is secured with your car as collateral, you'll have to surrender the title to the loan company and provide them with a key to the vehicle. They will keep the title on file until your loan is paid off, then they will return the title to you.
If you're not able to pay your loan payments, the loan company can take your car as payment for the outstanding balance of the loan. While they will repossess the car if they have to, they would prefer to have the loan paid, so if you're struggling with a payment, contact the company right away and see if you can make a partial payment to work out something to avoid defaulting on the loan.
Interest Rates and Title Loans
It's essential to understand that the interest rates on a title loan are often much higher than they would be on a traditional loan from the bank. The rates are higher because the title loan company is taking a higher risk, loaning money that could be much harder to recover.
A title loan is not the solution for everyone that needs cash, but it may fit your needs. Check with the title loan company in your area and make sure you understand their terms clearly before committing to the loan. If you do default, you will lose your car, and for some people, that could mean losing a job as well.
Learn more about auto title loans in your area today.Share