A car title loan is a short-term, secured loan against a vehicle owned by the borrower. The car is pledged as collateral in exchange for a certain amount of cash. For many borrowers, auto title loans are the easiest and fastest way to get their hands on cash quickly. At Embassy Loans of Florida, for example, most car title loans are processed within an hour, giving borrowers access to their cash quickly. Still, many people are confused about these types of loans. Here are the facts about car title loans.
Own A Vehicle? You Qualify
To qualify for a car title loan, you need to own a vehicle and possess the title to that vehicle. That’s it. Unlike traditional loans from a bank, your credit history or employment status do not play big roles in whether or not you can obtain an auto title loan. If you own a vehicle that is in good shape and have the title, you can qualify. Most title loan companies prefer that the vehicle is a newer model, usually no older than 10 to 15 years.
Car Title Loans Are Short-Term Loans
A title loan is normally to be repaid over a short period of anywhere from a month to several months. Most lenders will allow a borrower to roll over or renew the loan if it is not paid off within the term. Renewing the loan is done so with a fee, so it is in the borrower’s best interest to pay the loan off as quickly as possible.
Yes, You Can Drive Your Car
When you obtain a car title loan, the lender will take possession of the title. Legally, the lender owns the vehicle, but the borrower still keeps the car and can use it. That can all change if the borrower does not repay the loan. As the legal owner, the lender can take possession of the vehicle if the borrower defaults. Title loan companies then sell the vehicle to recover their losses.
Loan Amounts Vary
The amount that one can borrow is dependent on how much their vehicle is worth. Most title loan companies use current blue book values. Lenders will only lend about 30 to 50 percent of the value of the vehicle. This way, if the borrower defaults, the lender can recover most, if not all, of its losses.
Car title loans are an easy way to get access to much-needed cash. They are great in emergency situations, especially for someone who may have poor credit. Before taking out a car title loan, make sure you understand all the facts.