What is a Vehicle Title Loan?

A vehicle title loan is basically like pawning your car, truck, SUV or van for cash, but you still get to drive it. You will be eligible for this type of loan only if you are the owner of the vehicle and if the title is clean and clear. This means you have paid off the loan and have no liens against the title. The title loan company will keep your title until you repay the loan. If you default on the loan, they will become the new owners of your vehicle. Usually a towing company will be sent to retrieve your car. This makes a title loan very risky for the borrower.

How it Works

You can find title loan companies in many states as well as online. Once you decide on a company you are going to do business with, you have to begin the paperwork and application process. Be aware, many of these loans are no credit check loans similar to the no credit check payday loans. These loans carry an extremely high Annual Percentage Rate (APR) and can sometimes be higher than 800 percent. That having been said, following are the steps required to get a vehicle title loan.

  1. Application Process – This is where you will fill out all the necessary information the loan company requires. You should gather information such as driver’s license number, the VIN, references with phone numbers and addresses, and so on.
  2. Title and Insurance Proof – Once your application is approved to go to the next step, you will have to show the loan company you have the title and current proof of automobile insurance. The insurance is to protect their investment.
  3. Sending in Your Title – Upon your application getting approved, you will have to mail the title lender your vehicle title per their exact instructions. If you go directly to a brick and mortar location, you will just hand it over before you leave.
  4. Get Your Cash – Once the lender gets your car’s title, you get your money. The loan amount will be dependent on how much you are requesting versus the value of your vehicle and current title loan maximum.

After you receive your vehicle title loan cash, you will only have a predetermined amount of days to pay back the loan. Remember, if you do not pay off the loan or request an extension, you will lose your vehicle. Therefore, this should be considered only in a last resort situation.

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