One mistake we often make with our visitors is that we assume they know what a title loan is. Surprisingly this isn’t always the case. Many people will find themselves on our site after searching for online title loans or title loans online. They’re looking at our comparison of online car title loans, but first they need an answer to their question of what is a title loan? In this post we’ll get down to the basics and answer a question that we’re seeing more and more often lately, “what is a title loan and how can I get one”?
Online title loans are easier to get when you understand how they work!
You will often see many different definitions for the question of, what is a title loan. In fact there’s no specific industry definition that we can call in when people ask this question. To keep it simple, a title loan is a way to get cash by using your car title as collateral. There are many different variations of car title loans but they all come back to that simple definition. With online title loans you can typically borrow more money than what you would expect to get with an online payday loan or even a signature loan. You will also see less emphasis being placed on your credit score and or credit history. Reason being, you’re putting your auto up as collateral for the money you receive. Say you get an online car title loan for $10,000. Most car title lenders will let you borrow about 60% of the car’s value. This way if you fall behind on your loan the lender can always just repossess your car and sell it if you don’t bring the loan current.
Much like other types of online loans, car title loans are made up of several different parts. You have the collateral(your car) which was used to secure the loan, as well as the interest, fees and principal that you can expect with a loan. Most title loans will be spread out for a much longer amount of time than a normal payday loan or similar type of short term loan. You can usually work with your lender to come up with a payback time that works with you. Over the past few years we’ve seen many people stretch the payback time out longer than they should. Some people are even taking out online title loans for more than three years! While this may reduce your monthly payment it will undoubtedly cause you to pay more in interest charges. Make sure the lender has your best interests in mind when you are working on the loan terms!
Most companies that fund title loans online will overlook your bad credit or past credit issues. There are specific things they look out for like bankruptcies but for the most part you don’t need to worry too much if you have bad credit. Reason being, the title loan lenders know that you are securing your car to the title loan. If you fall behind on the loan you will run the risk of them taking your car and selling your vehicle at auction. Also, title loans online aren’t cheap. They come with high-interest rates that are much higher than what you would see with a bank loan or even with a normal car loan. The lenders know they are working with someone who may not have been eligible for a traditional loan. Online title loans should only be taken out if you don’t have any other options. If you have good credit you should stick to the normal financing options. There are many online companies that want to give you title cash but you need to do your homework and research. At this point in the application process, you should be able to answer the question of, what is a title loan? Don’t let the stop you from learning about auto title loans! There’s a lot to know before you apply for an online loan!
Pro-Tip: Don’t forget to ask you lender what the fees are included with their auto title loans. Have them outline and explain all the fees that are in your contract. If necessary you’ll want to go through the contract line by line to find any fees that they didn’t mention. It’s a red-flag if the lender refuses to do this. Much like when you purchase a car, there are tips available to walk you through the application process. some lenders will try to add in fees and charges without you seeing them. Examples of this include fees to check your credit and loan application fees. Don’t let charges like this get in the way of you getting a loan. Car title loans don’t always come with upcharges. Move on if this happens and find another company that funds car title loans online!