What Is A Car Title Loan?
An auto title loan is a type of secured loan that uses the title to a vehicle as collateral. In most cases, the car must be no older than 10 to 15 years and the title must be free of any liens. If you own a car or truck that is paid off, you can qualify for a car title loan.
How Car Title Loans Work
If you do qualify, you can fill out an application at a title loan company such as Embassy Loans of Florida. Applicants can even go online now to fill out applications. It takes just a few minutes and, when finished, the applicant will be contacted to provide some documentation. Applicants must prove their identity, their residency, and they must have the title to the vehicle.
Once these items are verified, Embassy Loans, like other title loan companies, will assess the value of the applicant’s vehicle. Most companies use a well-respected blue book value. Title loan companies will only loan approximately 30 to 50 percent of the vehicle’s value. In case the borrower fails to repay the loan, the lender then has the ability to recover most of its losses.
What About Credit?
For those with a poor credit history, a car title loan is the perfect way to access cash. Since the loan is secured by the title to a vehicle, there is no need for a lengthy examination of an applicant’s credit history. Unlike personal loans which are granted based on a signature and require a look at credit history, a car title loan offers the lender collateral. If the borrower defaults, the lender takes possession of the vehicle and can sell it to recover any losses.
Some title loan companies may run a credit report, but the loan is not based upon credit. As a result, car title loans are processed very quickly. In fact at Embassy Loans, most are completed within an hour of filling out an application. A car title loan is the perfect option for access to quick cash, especially for those with bad credit.