Car Title Loans – The Good & The Bad

Choose The housing and debt crisis of the late 2000s left the American economy weaker than it had been in years prior. Thousands of businesses, including banks, failed leaving many wondering how they would borrow should they need to do so. In recent years, the car title loan has become more popular as an alternative to the conventional types of loans offered by traditional financial institutions. Like any loan product, there are pros and cons to obtaining a car title loan. Let’s take a look.


The Good


  1. A car title loan is easy to obtain and the funds can be acquired very quickly.
  2. A car title loan is secured by a vehicle, which means that there is no need for things like credit reports. Borrowers with poor credit histories can still qualify.
  3. While the vehicle is used as collateral, the borrower still gets to keep and use it.


Obtaining a car title loan is pretty easy. To qualify, a borrower needs to own a vehicle that is paid off and has a title free of any liens. If so, the borrower can apply to a car title loan company such as Embassy Loans of Florida. The application takes just a few minutes to fill out and then the lender will begin processing the loan. Embassy Loans, for example, will verify a person’s identity and residency and make sure that the title and the vehicle match.


Since the loan is secured by the vehicle, there is no need to run a credit history on a borrower. Some lenders may still do so, but credit is not the primary reason for approving or denying a car title loan. Borrowers with less than outstanding credit can still use a car title loan to borrow money.


Once the loan is approved, the lender will possess the title, but the borrower keeps and uses the car. Once the loan is paid off, the borrower will be able to get the title back.


The Bad


  1. Interest rates are higher than traditional loans.
  2. Borrowers can lose their vehicles if they do not repay the loans.


A car title loan is a little more risky than a traditional bank loan and, as a result, comes with a higher price, or interest rate. Borrowers are encouraged to repay their loans as quickly as possible to save on interest payments.


Should a borrower fail to meet the repayment terms of the loan, the lender can take possession of the vehicle. The lender will then try to sell the vehicle to recover some or all of its losses.