In times of financial trouble, people have traditionally turned to banks and other lending institutions for help. For the past several years, the economic crisis that rocked the country in the late 2000s has prevented banks from lending freely. Financial institutions and even credit card companies have, on most occasions, denied the average person the ability to borrow money. As a result, people have had to find alternative sources of financial help. One of those sources is the car title loan.
What Is A Car Title Loan?
A car title loan is a form of secured loan where a borrower offers the title to a vehicle as collateral for a loan. Auto title loans are not as well known as conventional loans that one can take out from a bank. Car title loans do offer several advantages to borrowers.
The Car Title Loan Process
One of the big advantages of a car title loan is the time that it takes to process. A traditional loan from a bank can take several weeks to process as the lender carefully scrutinizes the borrower’s ability to repay the loan. The lender will evaluate a borrower’s credit history to determine whether or not the person is a good candidate for a loan.
The car title loan process is much different. A potential borrower fills out an application to start the process. At Embassy Loans of Florida, for example, an applicant must present a few documents, including the vehicle’s title, for examination. Once a person’s identity is verified and the title is deemed valid, the vehicle is then appraised for value. With a value established, the final loan documents can be drawn up and signed. Once signed, the borrower is eligible to receive the funds. This entire process normally takes between 24 and 48 hours, and many are completed within a few hours of filling out an application.
Credit History Is Not A Huge Concern
While traditional loans are based upon items like credit, income, and assets, a car title loan is not. Credit history is not a big concern. The borrower offers up the vehicle as collateral but maintains the ability to use it while repaying the loan. If the borrower defaults, the lender has the right to take possession of the vehicle and sell it to try and recover some, if not all, of its losses.
Car title loans are important because they offer a large segment of the population the ability to borrow when they otherwise would not be permitted. These loans are easy to obtain – if you own a vehicle that is paid off – and very quick to process.