How Does A Car Title Loan Work?

how a car title loan work

What is Car Title Loan?

A car title loan is a type of secured loan where the borrower uses the title of his or her car as collateral to obtain quick cash to sort emergency financial need. A car title loan is a short-term loan and the interest rate depends on a number of factors like the duration of the loan term.

How Does Loans Work?how does a car title loan work?

There are different forms of loan contracts; it can be a verbal or written agreement between a borrower and a lender. Most times, these agreements are written for clarity and accountability purpose. There are various institutions in the business of providing loans for people, individuals, and corporate bodies, these institutions include banks and cooperatives among others. Banks lend people money for significant reasons as they will want to be sure that you are capable of paying the loan and as a result of this they carry out several credit checks and request for several documents just to make sure you are committed and to know if you have the capacity to pay the loan. These lending institutions put certain interest rate you have to pay as you pay off the loan, this means you will be paying a certain amount that is above the actual amount you borrowed. The amount you repay is dependent on the interest rate agreed between the borrower and the lender.

Types of Loans

The borrower has several options available to them when they decide to obtain a loan. There are different types of loans such as secured and unsecured loans. These loan types have different terms and conditions with varying interest rates as well. Other types of loans are named based on the purpose for which the loan is given; for example, we have car title loans, mortgage loans, personal loans, auto loans, school loans, and payday advances among others.

Secured Loans

A secured loan requires an asset as collateral; an example of a secured loan is a car title loan. For example, if a borrower who obtained a car title loan defaults, the lender has the right to take possession of the car and auction it to cover for the loss on the loan.

Unsecured Loans

An unsecured loan does not require collateral but it carries high-interest rates and the borrower is obliged to pay any other fees highlighted in the agreement. The monthly fees for an unsecured loan can be costly. Lenders charge as much as 25% of the borrowed amount and it is important for the borrower to ask the lender about the Annual Percentage Rate (APR) on the loan before applying or signing the dotted line. The APR is the overall cost of the loan.

How to Obtain a Car Title Loan?how does a car title loan work?

You can apply for a car title loan on our website and our representative will get in touch with you as soon as possible. We require the title of the car as collateral and we place a lien on the title. This lien is removed as soon as the borrower pays off the loan. We require a few documents like your age declaration to be sure you are above 18 years, a government ID as a means of identification, proof of residence, proof of income, and vehicle insurance. This is the way how car title loans work and they are the fastest way for an emergency.

We do not carry out any credit check when you apply for a car title loan and we will not keep you waiting to know whether you are approved or not as we get back to our applicants almost immediately, usually less than 30 minutes.