How Does a Car Title Loan Really Work?

how does a car title loan work

HOW DOES A CAR TITLE LOAN WORKS

Car title loans are a type of short term loan meant to help people in financial emergency needs with quick cash that are affordable. Like another type of secured loans, car title loans require collateral from the borrower in order to get approval from the lender. In this case, the title of the car owned free and clear by the borrower is what is used as collateral.

Are there Credit Checks with Car Title Loans?

No! No credit check is required when you apply for a car title loan. You are accessed by your lender based on the worth of your car and your earnings in order to determine the loan amount you can get and if you have the capacity to repay the loan.

How Does a Car Title Loan Works?how does a car title loan work

A car title loan is a type of loan where the borrower requests for a cash advance using the title of his or her car as collateral. The lender places a lien on the title, this lien is lifted as soon as the loan is fully paid off. The loan agreement terms are signed by both the lender and the borrower. The terms will include the monthly amount to be paid by the lender most times on a monthly basis, it will also include the duration of the loan, the loan amount and other details.

You can Still Drive Your Car

An interesting part of a car title loan is that the borrower can still get to drive the car while paying off the loan. Although, some lenders may install a GPS tracking device in the car for monitoring.

However, in case the driver defaults on the terms or refuses to pay at the right time, the lender has the right to repossess the car and auction it off in order to pay for the amount left on the balance. Hence, it is important that when you go for a car title loan, you should have a definite plan in place that will ensure you are able to pay as when due, you should also try as much as possible to negotiate the best interest rate, keep the loan duration as short as possible because this will help you to negotiate a more favorable interest rate.

What do I need to Apply for A Car Title Loan?

You will be required to submit the following documents you apply for a car title loan;

  • Age declaration to be sure you are over 18 years.
  • A government ID
  • Proof of residence
  • Payslip or proof of income
  • Vehicle insurance.

Advantages of Car Title Loans

  • It is fast, simple, and straightforward.
  • No credit check required to qualify for a car title loan.
  • It only a few documentation.
  • You can apply for a car title loan from the comfort of your home or office.
  • You can negotiate your payment or loan agreement terms to suit your unique case.

A very easy way of getting quick cash when you are in need of one is to go for a car title loan as long as you own your car free and clear with the car title in your name.