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Title Loans: Description, Requirements, Pros and Cons

Description, Requirements, Pros and Cons

Any person, regardless of his income, needs fast cash from time to time. There are several ways to solve this problem. Most often a person borrows money from friends or applies for a bank loan. But these solutions involve certain difficulties. So, it’s quite difficult to borrow a large amount from a friend, and a bank loan comes with a guaranteed unprofitable interest rate. In addition, it is necessary to collect a number of documents, find guarantors and wait for the decision of the credit institution for a long time. There are 2 good alternatives to this option¬†–¬†quick payday loans online and title loans.


To receive a title loan, in addition to the car, it is usually necessary to submit the following documents:

  • State-issued ID;
  • Driver’s license;
  • Documents for the vehicle: car passport, registration certificate, etc.;
  • The second keys to the vehicle (in some cases).

To get such a loan, a client fills out an application, online or in the lender’s office, indicates his contact details, place of work and income level. The higher the income of the borrower, the higher the chances of approving a loan. All this information will be carefully checked by the lender before taking a decision on the loan.

Some online lenders make less strict requirements to car owners than banks. It is enough to show a state-issued ID and papers confirming the ownership of the car.

Important! Not all cars are suitable as collateral. A potential lender will refuse a loan if the car is in an emergency condition, not cleared or not registered.

Loan amount, interest rate and terms of issuing a title loan

First of all, it’s necessary to determine the value of the car. Specialists from the credit organization and the insurance company determine the amount of the loan. Usually, it does not exceed 70% of the cost of the car. The period of lending does not exceed 12 months but some lenders, unlike banks, offer the possibility of extending the contract if the borrower is unable to repay the borrowed funds on time.

The decision on issuing a title loan is taken by a lender within 24 hours or even within a few hours.

Interest rates are determined individually and vary from lender to lender. Most credit institutions offer their clients the right to repay the debt before the due date and thus reduce the interest rate.

All the loan terms and rates are disclosed in the agreement. In particular, the agreement indicates:

  • for how long a loan is issued;
  • whether it is possible to extend the contract;
  • how can the debt be repaid;
  • whether early repayment is allowed, etc.

Should I take a title loan? Summing up

We can conclude that taking a title loan is a convenient and profitable solution that has a number of advantages.

  • Speedy approval. Cash under the loan agreement will be issued to the client on the same day or within 24 hours;
  • Convenience. After signing the contract, a client can continue using his vehicle;
  • Favorable interest rates. The rates are on average 10-15% lower than those for bank loans;
  • No need to provide certificates and seek guarantors;
  • The possibility of obtaining a loan for any needs.

The main disadvantage of a car loan is the probability of losing a vehicle. This can only happen if you fail with loan repayment. Also, the risks are associated with the dishonesty of credit institutions. In such cases, the borrower may encounter hidden payments. That’s why you should choose experienced lenders with a good reputation.