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Too much credit card debt? There is a way out! Free Debt Consolidation Quote! What is a title loan? It is a loan that is secured by your car, which, if you fail to pay in a timely manner, you could lose your only means of transportation. If you own something of value, such as a vehicle, you could get a loan to help pay off some bills or to use as you need. Title loans offer you money in exchange for holding your vehicle title as collateral. It doesn’t mean that you don’t have your car or that you are selling your car, however it does create a lien on your vehicle until the loan is paid off. Many different kinds of loans require collateral of some type. Mortgages require collateral, only they hold the home that they are financing as collateral. The same type of idea is used with a title loan only the lender will create a lien on your vehicle. The lien means that if you fail to pay your title loan, the lender can repossess and sell your vehicle to pay the loan off. It’s not a good idea to let matters get as far as repossessing your car—it’s a bad mark on your credit rating on top of not having a vehicle. If the lender has to repossess your vehicle and sell it and your vehicle sells for more than what you owed on the title loan, you are entitled to receive the amount over and above. However, the lender will also charge you for the cost of repossessing and selling your vehicle. In order to get a title loan on your car, you must own the car outright—meaning that you do not owe anything on the car in the form of any loan, and there can’t be any liens on your vehicle in order to get a title loan. When you go to a lender to get a title loan, they will ask you questions about your employment and your vehicle. The lender may request that you prove your income--you can do this by giving the lender the last few months pay stubs from work. You will have to bring the title papers to your vehicle as well so that the lender can hold onto them once your loan is approved. The title papers of your vehicle also have all the pertinent information about your vehicle printed on them. If you are applying online, you don’t have to send your title papers to the lender, however you will have to prove full ownership of the vehicle and provide the lender with all the necessary information about your vehicle. Title loans are considered to be a short term loan—usually, the period of time you have to pay the funds back is less than a year and most typically only a couple of months. As with most short-term loans, such as payday loans and quick cash loans, your title loan will likely carry a very high interest rate. With such high interest rates, it is more advisable to pay off your title loan as soon as possible and avoid as much interest charges as possible. The longer it takes you to pay off the loan, the more interest you will end up paying. When you apply for a title loan with a lender, be prepared to answer all of the questions truthfully. Also, during the application process, some lenders will do a credit check on you to find out your ability to repay the loan. However, having bad credit doesn’t mean you won’t get a title loan on your vehicle. Most title loans are for less than $5,000--which make them easy to repay in less than a year. Keep in mind that the interest rates on title loans are often quite high, and the more you borrow and the longer it takes you to pay it back, the more interest you will pay. Subsequently, if you fail to make payments on your title loan, the lender will repossess your car and sell it and charge you for the costs that they accrue doing so. Title loans can get you the money you need fast--all you need is a vehicle with a clear title and proof of income. [
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