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Understanding Car Title Loans


An auto title loan is ideally a short-term loan that uses a car title as the collateral for the loan. The repayment period for this kind of loan is usually 30 days. With car title loans, you’re only allowed to borrow small amounts, typically in the tune of a few thousand dollars. The loan is meant to serve as a short-term financial fix for small, unexpected money problems.

One of the key benefits of car title loans is that they are some of the most common kinds of loans available today. This is because they are usually easy to access and only come with few restrictions and/or requirements.

Unlike bank loans, which often demand a whole lot of conditions such as stellar credit score, collateral, and guarantors, car loans have much fewer restrictions. In most cases, the applicant only needs to have the title of their car or access a short-term loan.

Moreover, very little paperwork is needed during the approval process and the process is usually fast.  Find out how to refinance your car title loan in California.

Fast Cash Access

Any car owner who has a steady flow of income can apply for a car title loan. The application process is generally easy, and you can do it online or via the physical location of the merchant. Once you fill on all of the necessary paperwork, a merchant’s representative will take photos of your car and schedule a day to collect the title.

You also have the option of showing up equipped with the car title to allow faster processing. If everything checks out, you’ll have the money transferred (or wired) to your account anywhere from 24 hours to a few days to be approved.

Credit Scores Don’t Matter

With car title loans, the credit score of the applicant doesn’t matter. It’s all about having the title of your car in hand. Considering the hard economic times and how hard it is for most people to keep a stellar credit history, more and more people are unable to access conventional loans.  This is not the case with car title loans.

You Get to Keep your Car

For as long as you don’t default on the loan repayment terms, you get to keep driving your car. As we mentioned earlier, the only thing the lender needs is your car’s title. The car itself is not involved during the application stage.

Provided you keep your word on your side of the deal and keep paying your loan installments on time, you’ll get to keep your car until the loan is repaid in full, where the car title will be returned to you.

Lower Interest Rates

Car title loans enjoy low-interest rates compared to other options such as payday loans. The lender regards these loans as secured loans and typically don’t need to charge exorbitant interest rates on them.

You give the lender the title of your car for the amount of time that you need the loan. Keep in mind that besides the interest rate, you also have to pay the lender a specified fee for borrowing the money. And while the loans can sometimes be expensive, they are quite effective for emergency financial situations. This is especially the case for people who don’t have a fully funded emergency fund.

Richard Clayton

Author bio:  I am Richard Clayton, a freelance blogger.  Home improvement and gardening are my favorite niches.