A car loan and a car title loan are two very different types of loans. While car loans are almost a part of our everyday existence, the car title loan is not as widely known. Title loans have become more popular over the last decade as borrowers look for other means of borrowing money. Here are the key differences between these two types of loans.
The Standard Auto Loan
When someone wants to buy a vehicle these days, the norm is to finance the purchase. It is rare that a car buyer pays $20,000 or $30,000 in cash for a new vehicle. It is likely that a buyer seeks out a loan to make the purchase. Car loans are available from several different institutions including banks, credit unions, and even through the credit departments of the major auto companies.
When buying a car, the financing process will involve the examination of the borrower’s credit report as well as an evaluation of the person’s income and assets. The lender wants to make sure that the borrower is fully capable of repaying the loan. Good candidates will have higher credit scores and payment histories that show that they pay their bills on time.
A car loan is usually for several years, periods of five, six, and seven years are standard. Buyers can make a down payment but, in some cases, they are not required. The borrower, if approved, will make a monthly payment for the vehicle. Once the buyer repays the loan in full, he or she owns the car outright.
A Car Title Loan
A car title loan is not used to purchase a car. An individual already owns a vehicle and uses that car or van as collateral for a loan. Car title loans are for when someone needs fast access to cash. Embassy Loans is one of the largest consumer finance companies in Florida and has helped tens of thousands of customers with car title loans.
To qualify, a borrower must own a vehicle outright. There are some requirements for the vehicle, and it should be in good condition. The car title loan process is different than the typical car loan process. Credit checks are not necessary and minimal income information is needed. Not requiring credit checks helps to speed up the process. Embassy Loans can complete many of its loans in as little as 1 to 2 hours. Loan terms are also different, with the average car title loan typically repaid within 12 months.