LOS ANGELES, May 10, 2021 /PRNewswire/ -- Borrowers who own vehicles and need quick, easy cash can leverage what's known as an auto title loan (also called a car title loan or simply a title loan). Essentially, these types of loans allow the borrower to leverage their car as collateral for a loan. This article will explain how title loans work in more detail and how much a borrower can receive from one.
How Do Car Title Loans Work?
Car title loans use the borrower's car as collateral by giving the lender the title to hold onto during the loan term. These loans are typically short-term loans where borrowers can find title lenders both in-person and online. Title loans offer quick applications and require no credit. Also, borrowers can often receive their funds in less than 24 hours.
The borrower can continue driving the car after receiving the funds while the loan is outstanding. A free and clear title is often required by car title loan lenders.
How Much Can a Borrower Get from a Car Title Loan?
According to the Federal Trade Commission, car title lenders generally offer 25-50% of the borrower's vehicle's value as a title loan. They state that most title loans fall between $100 and $5,500 on average. However, some title lenders may offer $10,000 or more. The more valuable the borrower's car, the more they can receive.
Drawbacks of a Car Title Loan
Title loans often come with high APRs and may include additional fees. Also, if the borrower is unable to pay back the entire loan balance on time, they risk having the lender repossess their car.
Leveraging Cars for Cash
When a borrower is short on cash, they can leverage their assets for some extra funding. For anyone that owns their vehicle outright, a car title loan is one of the fastest and easiest ways to get more money. Application and funding times are short, and no credit check is required — making them helpful for borrowers with less than great credit. Not to mention that the borrower can continue driving their vehicle. As long as borrowers pay back the title loan on time, it can be a good tool for getting through a financial squeeze.
Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.
SOURCE Advance America