A title loan is a short-term lending option for people who own a vehicle. The basic concept of the loan is that a vehicle is used to secure the money that is borrowed. This benefits lenders because the vehicle can be sold if the borrower does not repay the loan. This reduces the risk of losses. The amount that can be borrowed is usually based on the actual value of the vehicle. Cars that are more expensive allow for larger loan amounts. The lender places a lien on the car until the loan is repaid. Most borrowers also have to give the lender a physical copy of the vehicle title.
What is the purpose of title loans?
The main purpose of title loans is to provide average people access to financing. Traditional loans through banks usually come with many requirements, such as an exceptional credit history or a large number of valuable assets. This is not the case with title loans. Since the vehicle is securing the loan, lenders do not care as much about past financial issues. Most loans require no credit check. Anyone with a vehicle, a stable income, and proof of residency can usually qualify for a title loan. This helps people with poor or non-existent credit histories.
Where do you get a title loan?
Title loans are available only in certain states. There are three main places to receive a title loan. The most direct place is through a local title loan storefront. This involves walking in and providing the required paperwork. You can also obtain a title loan online. Some lenders will approve the loan completely online by checking data electronically. This can be convenient, although some lenders have stricter requirements for online title loans. Finally, you can acquire a title loan over the phone by calling a lender. Getting a loan online or over the phone often requires mailing in a physical copy of the title.
How does repayment work?
Title loans can be repaid either in a single lump sum or over the course of several weeks or months. Many loans need to be repaid within 30 days. Alternately, a lender could set up a traditional payment plan similar to what is seen with conventional bank loans. You do pay interest on the loan. Certain lenders allow for refinancing if financial problems make on-time repayment impossible. If you fail to repay the loan on time, then the lender can sell the vehicle, although this rarely happens.
What are the advantages of title loans?
The main advantage of titles loans is that you gain access to cash quickly if you own a vehicle. Many title loans are approved in a day or less. This means the money could be in a bank account in just two or three days. Title loans make it possible to avoid late payments or to access money before upcoming paychecks. Title loans also allow you to use the money on anything from bills to a vacation. Additionally, although the lender has a lien on the vehicle, most borrowers are able to continue using the car while the loan is being repaid.