An auto title loan, or title loan, allows you to borrow against the value of your car to obtain instant cash. Use means that if the car title loan is not paid off, the loaner can take the vehicle and sell it to recover the money from the loan. Collateral- An auto title loan is a secured loan on your car, meaning if you are behind on payments, the lender may seize your vehicle and sell it to try and collect payments.
Auto Title Loans Do Not Require A Down Payment Or A Credit Check – Unlike car loans, auto title loans do not require a down payment, and they do not require a credit check because of the security they offer. Instead, auto title lenders earn money through higher interest rates and by repossessing cars when consumers cannot repay their loans.
What makes car title loans so different, so attractive, is that although you are borrowing against your vehicle’s equity, you can continue driving your vehicle, almost always, even as you are paying back your loan.
Best Vehicle Title Loans in Canada
Some individuals who are desperate for fast cash might rush out to their nearest auto title lender to borrow quickly, but that is far from a great option. Instead, borrowing against your vehicle is a way to get fast cash without meeting the strict financial requirements of a non-title loan. In addition, loans against a car’s title are typically available within one or two days, and they may be a viable short-term solution if you need money for an emergency.
Loans against a car title are generally easier to get approved because they are secured, making them an excellent option for people with limited credit. Typically, auto title lenders have few requirements for prospective borrowers, such as not checking credit or requiring proof of income.
How to get approved for a car title loan?
After a quick credit check, you will be offered options of auto title loans in your province, which you can immediately apply for. Because you are using your vehicle as collateral for the loan, you may get approved for a car title loan even if you have a lower credit score or income. In addition, if you take out a car title loan and cannot pay back the amount you borrowed, plus all of the fees, a loan officer may allow you to roll over your loan to a new loan.
While interest rates must be significantly lower than traditional bank loans, the borrower may still want to put their car up as collateral as a goodwill gesture toward lenders. Using makes these loans easier to qualify for while also giving the borrower access to more competitive rates. In addition, this means those who would not be eligible for a conventional loan, such as due to poor credit scores or for other financial reasons, can use their vehicles to serve as collateral, thereby decreasing the loan risk to lenders.
Can I keep driving my vehicle once I get the loan?
If you are caught in a situation where you cannot repay your debt, your lender may repossess your vehicle. If you default on the payment, the lender probably won’t send you to collections, damaging your credit – the lender could repossess your car to settle the debt. If you are not able to repay your original loan, plus the interest that has accrued, the lender has the right to repossess your vehicle.
Once borrowers and lenders settle, the lien is placed on your vehicle, which is removed only after you have paid the loan in full. In many cases, you must already be paying off all of your other loans used to buy your vehicle, but some lenders will let you borrow as long as you are still paying down a regular auto purchase loan.
Get a car title loan online.
Some lenders do offer loans to people with poor credit, but they often have higher interest rates–though those rates are still probably far lower than the 300% APR that you would pay for an auto title loan. While someone with poor credit might be looking at a higher-end APR, the rates from online lender CashUSA are still far more affordable than what you would pay for a car title loan. CashUSA offers loans as low as $10,000, but — according to their website — that can go up. Designed especially for people with poor credit, CashUSA, the online lender, offers exceptionally high approval rates as long as you post a vehicle as collateral.
Other collateral loans to consider
As an alternative to the risky and costly payday loans, some federal credit unions are offering Alternative payday Loans (aka PAYDAYs) from $200 to $1,000. In addition, there are a variety of loan alternatives, including peer-to-peer loans, short-term bank loans, credit card cash advances, and even charity donations. Key Takeaways Auto title loans are short-term, require borrowers to place their vehicles as collateral, and carry a much higher interest rate than a typical bank loan. To help you find a car title loan lender that has the best offers, you can use a loan comparison site such as Loans Canada to receive multiple quotes from multiple lenders using one application.
A vehicle loan is a type of loan in which you may use the money to buy a new or used car; in this case, the car you wish to purchase acts as collateral for the loan. When you put collateral on a personal loan – operating a vehicle or other assets – it becomes a secured personal loan. For example, to get a title loan, you give your loaner the title to your car (or bike), and your car serves as collateral. If a title loan on a vehicle is your only choice to obtain quick cash, compare multiple offers so that you get the best possible interest rate, and only borrow as much as you can afford to repay over the life of your loan.
Also, read no credit check loans or are extended warranties worth it?
You really can get out of debt on any budget.