What is a Car Title Loan?
The COVID-19 pandemic has resulted in financial difficulties for people across the globe. In fact, 1/3 of Canadians say that they feel that they’ll never fully recover from the financial hit of the pandemic.
If you are in a tough spot financially and need money fast, you might consider a car title loan. If you own your own vehicle, this is a quick way to get cash to cover your bills in the short term. Read on to learn more about the ins and outs of car title loans.
What Is a Car Title Loan?
A car title loan is a loan against your car title. What this means is that you can get a loan using your car as collateral. If you don’t pay your loan back, you may lose your car (i.e., you have to turn over the title to your car) to the loan company. They are called title loans because in exchange for the cash, you give the lender the title to the vehicle.
When you pay your loan in full, you get the title back. If you default on the loan, then the lender sells your vehicle to recoup the money that they lent to you. In Canada, car title loans can be for motor vehicles other than just cars, like motorcycles, RVs, and boats.
One benefit of a title loan is that your credit score typically doesn’t matter. Because your car is used as collateral, the lender is typically not concerned with your credit score.
How Do Car Title Loans Work?
To apply for a car title loan, you’ll need certain documentation, including:
- Photo ID (have two forms available)
- Proof of income
- Proof of car insurance
- Copy of your vehicle registration
In addition, you’ll also need to provide information about your vehicle, such as photos of the interior and exterior as well as a photo of the odometer. You’ll also need to bring your vehicle in for an inspection before the loan is finalized.
The amount you can get will depend on the year, make, model, and condition of your car. Typically, you can get about 50-60% of the value of your car. Your vehicle must be free of any liens and you must not owe much or anything on it.
The process is relatively straightforward, and if you are approved, you will often be able to get the money quickly. This company, for example, will transfer the money to you the same day you apply in many cases.
Get Money Fast
Most car title loans are short term as they are meant to be used in emergency situations. As a result, the interest rate is often high. However, if you have bad credit and need money fast, they are a good option for you, if you can pay them back.
If you found this information useful, be sure to check out more of our financial articles before you go for other valuable information.