Car title loans are a type of loan that allows lenders to access your car as a source of collateral in order to get the money you need. The lenders can then sell your car if you fail to make repayments. If the value of your car is less than the amount you borrowed, you will likely need to take out a second car title loan.
Car title loans are quick and easy to get, but the interest rates are higher than other types of loans.
They are also more likely to lead to a cycle of debt. They are short-term loans that are secured by the borrower’s car title. Usually, the borrower gets the loan for 1 to 4 weeks. With that, the borrower can get up to a few thousand dollars, depending on the value of their car and the state they are in.
However, the interest rates are extremely high compared to a traditional loan.
How do car title loans work?
Unlike payday loans, which serve a similar purpose, car title loans work by putting your vehicle up as collateral. These secured loans are usually for small amounts of money and often need to be repaid in a short amount of time.
For example, imagine you have a car worth $10,000 dollars and need $2,000 for a sudden emergency. Title Loans allow you to borrow against your car, similar to taking out a mortgage for a home, so you can get that money quickly. Until you pay back the loan in full, including interest, the lender reserves the right to repossess your vehicle.
How much can you borrow from a title loan facility?
There are many different factors that go into determining how much you can borrow from a title loan facility. These factors can include your credit history, your income, and your debt, among others. Your income is usually not a factor for title loan lenders, but your debt and your credit history are important.
The reason for this is that these factors can help lenders determine whether you will be able to repay the loan on time. One of the most important factors that determine how much you can borrow from a title loan facility is your credit score.
If your score is good, you are likely to be able to borrow more. If your score is bad, then you will probably only get the minimum amount of loan that the lender offers.
Why should you use car title loans in a time of crisis?
When you are in a financial crisis, you have to make a tough decision. You have to make a choice between repaying your bills or repaying your debts. Unfortunately, a lot of people fall for the trap of selling their assets at a very low rate just because they need money to pay off their bills.
In such cases, you are often left with no other choice than to take out a loan from a bank or an independent lender. However, a lot of people have bad credit scores which makes it difficult for them to get a loan.
Car title loans are one of the most popular and convenient forms of loans in the market. It is a loan that is secured by your car and can be paid in shorter duration as compared to any other form of a loan.
Car Title Loan Application Process
The process for getting a car title loan is relatively simple:
- First, you fill out an application. You then show the car, the title, and a copy of your photo ID to the lender. You may be asked for a duplicate set of car keys.
- If the loan is approved, the car title lender exchanges the money and keeps the vehicle title.
- When it is time for repayment, you pay the lender a monthly fee in addition to the borrowed amount.