All About Car Title Loans

Generally, a car title loan is a loan for a small amount of money granted over a short period of time. To secure a car title loan, you give the lender your automobile, for instance your truck, car or motorcycle and then pay the lender fees for borrowing the money. Such a loan has to be paid within 30 days. Car title loans tend to be quite expensive. If you have access to other forms of funding where costs and risks are minimal like family or friends, it would be better to opt for them. In the case of a car loan, if you are unable to pay the amount you owe in the stipulated time frame, the lender can seize possession of your vehicle.

The procedure for obtaining a car title loan is very easy. All you have to do is show the lender your application, your car, the title to your car and your photo ID. If your car title loan is approved by the lender he will give you the money and keep the title to your car. When the time comes to repay your loan, you pay the lender the loaned amount together with a monthly fee. If you are unable to pay the lender when the money is due, the lender may choose to let you borrow the money for another period of 30 days. This is referred to as a rollover. This will require the payment of another monthly fee. If you roll over several times and you cannot pay your lender the money that you owe, then the lender may repossess your car. This involves selling the car and keeping the money.

There are many benefits to car title loans. First of all, it is an easy way to get quick cash. They are usually very fast and convenient. You can complete the application in a matter of minutes and once the application has been submitted, you may even receive the cash within the same day. Another major advantage of this type of loan is the fact that credit is not an issue. Most people are usually disqualified from getting loans due to their bad credit scores. Here your collateral is your credit score and so you do not need to have good credit to get this loan. Most lenders will provide you with a loan so long as you have a source of income or the value of the car is greater than that of the car title loan.

However, for every option, there are pros and cons. There are quite a number of demerits associated with car title loans. One of them is the time frame of the loan. These are usually short loans that will last a brief period of time, at most a month. At first the interest rate is low, however, as the loan rolls over, the interest rates will increase making it very expensive to pay back. Another major disadvantage is the risk of losing your collateral. In case you default on your payments, you stand to lose the vehicle you put up as collateral regardless of the value of money you owe.