Over the past decade, the average household has watched as its ability to borrow has almost disappeared. The financial crises that occurred in the U.S. as a result of the housing debacle and bank bailouts forever changed the credit industry. What was once a period of easy borrowing tightened considerably. For the average borrower, it has meant less access to money to buy homes, cars, for emergencies, and more. As a result, alternative forms of borrowing have become more popular. One of those alternatives is the car title loan.
What Is A Car Title Loan?
A car title loan is a secured loan where a borrower uses a vehicle as collateral. If the borrower fails to repay the loan, the lender may take possession of the vehicle and sell it to recover its losses.
What Documentation Is Needed?
Embassy Loans of Florida, one of the state’s leading consumer finance companies, requires applicants to prove their identity and residency. The applicant must also present a clear title to the vehicle being used as collateral. A clear title is free of any liens. The vehicle identification number (VIN) on the title must match the VIN on the vehicle.
What About Credit History?
Unlike more traditional loans from a bank, there is no need for a credit report. Some title loan companies may do a credit check, but it is not a huge factor in whether or not a loan is approved. Since the vehicle is used as collateral, credit becomes less important as a determinant to loan approval.
What Happens To The Car?
The borrower continues to use the car as he or she always does. The lender will get a copy of the keys and will hold the title until the loan is paid off, but the borrower maintains use of the vehicle. If the loan goes into default, the lender can come and take possession of the vehicle.
The Advantages Of A Car Title Loan
It is pretty easy to see the many advantages of a car title loan. A borrower gets to keep using the vehicle that is used as collateral. There are not as many documents needed in the processing of a title loan. Title loan companies do not spend a lot of time reviewing credit reports or background information. This saves a huge amount of time. The typical car title loan can be processed and a borrower can have his or her money within an hour. Conventional loans usually take a few weeks and sometimes a few months.