What are car title loans?

A car title loan, also known as a title loan, is a loan in which you, the borrower, put your car title up as collateral in order to obtain a loan.
These car title loans are usually short-term and typically involve higher interest rates than other credit options. The reason that these car title loans have higher interest rates than other credit options is because the lender usually does not check the person’s credit report or credit score and bases the loan purely on the value and condition of the vehicle being used as collateral.

Car title loans usually take only a few minutes to obtain. The amount of money a borrower may be given, however, may fluctuate as low as one hundred dollars to more than a thousand. The reason a borrower may seek a car title loan instead of a loan with another creditor is because most other financial institutions will not loan such a low amount of money to someone without any credit or with a bad credit score as they consider these loans too risky. Other criteria that a lender may consider for a car title loan, other than checking the car’s value via collateral would be verifying employment and income.

How It Works

The maximum amount of the car title loan is calculated by the value of the collateral being put up. This is usually approximately a fifth percent of the car’s blue book, or resale, value. However, it’s possible that a lender will offer more than fifty percent of the vehicle’s value. The borrower must own a full title to the vehicle – this means that the vehicle being used as collateral must be paid in full with no current financing. Many lenders will also require the borrower to have full insurance on the vehicle being used as collateral.

Interest rates for car title loans can range from thirty six percent to as high as six hundred and fifty percent APR. Payment plans vary depending on the income of the borrower, etc., but the borrower must pay the minimum interest due at each due date – usually every month. If the borrower cannot pay the loan off via the payment plan, then the lender they can roll the balance over and create a new car title loan with the last car title loan’s balance. The total number of times this may occur is regulated by Government institutions.

Bradley Songer

Bradley Songer

“His eyes are open”, the doctor declared astounded. I was born into this world on Memorial Day, May 30th, 1991, with bright, blue and curious eyes wide open. The attending physician stated that having one’s eyes open at such a young point in time for a newborn was a rare occurrence. Days became weeks that turned into years. Almost instantaneously, I seemed to be entering elementary school. At an early age I found reading, writing and arithmetic to be thoroughly interesting subjects. Reading and writing became second nature to me and became my top two hobbies. I excelled in academics all through elementary, intermediate and high school, eventually deciding to attend the prestigious University of North Carolina at Chapel Hill in 2009.

I am currently a sophomore at the University of North Carolina at Chapel Hill seeking two degrees both in Business Administration and Economics. I am a member of the Carolina Covenant Scholarship program. I am interested in business, ecommerce, economics and investments. I have always enjoyed playing sports: basketball and soccer being my favorites. I am a diehard Carolina fan and hope to see a NCAA championship by the time I complete my undergraduate degree. Go Tarheels!
Bradley Songer

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