Title Loans - All you need to know

Henry Githinji

Henry Githinji

Henry plans to be an entrepreneur with his own financial consultancy firm, specializing in in binary options and stock trading. Henry is a day trader and plans to use the capital he makes to launch his business. He plans to build a portfolio that attracts investors through his trading performance.
Henry Githinji

Credit checks for title loans

Title loans are a convenient way out of emergencies which may pop up in the middle of the month when the next paycheck has yet to arrive. Title loans allow you to use your car as collateral to get the loan. You are required to submit the title of your car, its insurance information and other personal information such as proof of income. However, title loan lenders don’t look into your credit history in detail like other loan companies would, although they may still do some kinds of checks or verification to confirm your suitability to take a loan. The lending business is risky, especially when it is lending to a stranger without a good credit history. So title loans typically have higher interest rates to make up for that risk.

Title loan amounts range from $100 to $5500. This amount could even go higher, depending on the title lending company. However, considering that the collateral involved is a car which is worthy of selling in case the borrower is unable to pay back means that the odds are always against the borrower and not the lender. The amount the borrower gets is about 25%-50% of the car’s current market price. This could go higher depending on the title lender. However, most lenders do not exceed the market price of the car. This means the lender will still get to recover his money and probably even make a profit with the sale of the repossessed car if the loan goes unpaid.

In case the title loan is not paid in full, the car will be repossessed and sold to cover the outstanding debts. However, the loan amount is always less than the car’s market price. This means that if the car is sold, its market price covers the loan and its processing fee. In some states, the title lender is required to return the extra money from the sale of the repossessed car to the borrower, after deducting the outstanding loan amount and its processing fee. However in other states, the legislation allows the lender to keep all the money from the sale of the repossessed car. Thus, it is a win-win situation for the lender.



Car title loans are mostly short term, ranging between 15 and 30 days. Thus, the lender isn’t put  in an uncomfortable situation – he can either decide to get his money back or perhaps offer the borrower a rollover option which allows the latter to look at the unpaid loan as a new loan with new terms and additional fees. This again benefits the title loan lender. Consider also these benefits of title loans.

The lender also imposes fees on the loan. The fees cover all loan processing procedures as well as the risk if the borrower cannot repay all loan charges. The lender always has the upper hand and has lots of avenues to recover his money in case the borrower is unable to pay up.

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