A title loan is essentially a short-term loan with a higher interest rate, where your vehicle serves as collateral. If you’re in need of a loan and have a less-than-perfect credit history, a title loan can be a viable option. This article will provide you with an explanation of this concept. Continue reading to enhance your comprehension.
How Title Loans Operate
To begin with, you can use your car as collateral for this type of loan. If you fail to repay the loan on time, the lender has the right to take possession of your vehicle. Typically, short-term loans like these come with higher interest rates.
As a result, even if you have a low credit score, you have a good chance of being approved for the loan. Most lenders won’t even consider your credit history or rating.
How It Works
The first step is to find a lender that offers title loans. If you own a vehicle registered in your name, you may be eligible for this service. Your lender may require you to present your car, your driver’s license, and proof of ownership before you submit your application.
Once your application is approved, you’ll receive the loan amount by surrendering your car title. While most title loans have 30-day terms, the lender will determine the specific terms.
In simple terms, you’ll repay the loan in a single lump sum at the end of the loan period. This includes the principal amount, as well as all associated fees and interest. Many of these lenders charge a monthly fee equal to 25% of the loan amount.
