Everything You Need To Know About Car Title Loans

Bad credit history can often prove to be a serious problem for you whenever you are in a difficult situation and you need financial help. Lenders, banks and financial institutions usually perform a background check on you to determine your credit history and if you have a poor credit history at any time of your life, your loan is going to be rejected. No matter whether you have applied for a short term of long term loan, bad credit history is going to give you a hell of troubles.

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But there are some specific type of loans which do not require a credit history check and such type of loans can be useful if you need instant money but do not have a perfect credit history. I am talking about car title loans. Such type of loans are ideal for poor creditors looking for loans and amount to borrow.

Car Title Loans – An Introduction:

Car title loan is a short term loan in which car is taken as a collateral in case of a situation where the borrower is unable to pay back the loan amount. Car is used to secure the loan for the lenders minimizing the risk. A lien is placed against the car which is to put as a collateral and a copy of car title is surrendered to the lender along with a copy of car key.

In case the borrower defaults on the repayment of loan, the car is confiscated to fulfill the damage. If the borrower successfully and completely payback the loan, the car along with its title and the copy of key is given back to the borrower.

Car Title Loans involve High Interest Rate:

As it is a type of short term loan, you must know that it involves high interest rate as compared to the other type of loans. This means that this type of loan can be expensive for you but it might be your only chance of getting loan if you are a credit defaulter.

The APR can go as high as up to 36% and can even increase. But if you have a perk that your credit history is not checked instead the condition and value of the car is considered for the lending of loan amount.

Car Title loans Involve Risk for Both Parties:

This loan can be quite risky not only for borrower but for the lender as well. If the borrower is unable to pay the loan amount, he have to leave his car. On the other hand, if the borrower could not pay the amount, the car may not be as valuable as the amount borrowed.


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