Car title loans have been around for years, yet the most common question is, "How do car title loans work, and what do I need to apply?" Much like payday and installment loans, a title loan offers a quick way to get a lump sum of cash. You typically don't need good credit, and you can borrow $1,000 or more when most traditional lenders will turn you down.

There are many factors that set car title loans apart from typical short-term loans. The most significant difference is that you're securing your vehicle for the amount borrowed. That's right, with most types of online title loans, you must let the lender attach a lien to your car. Here's the good news: With a car title loan, you can get much more money than expected if you go to a bank or credit union, and you typically don't need to deal with the hassles of a credit check. Best of all, title loans are an ideal way to get money quickly without waiting days for underwriting.

How Does A Title Loan Work

Car title loans use a lien free vehicle as collateral for a loan. Once you realize they are similar to home equity loans or other secured loans, they are easy to understand. Your car serves as security for the amount you borrow, and you risk defaulting on the loan and having your vehicle repossessed by the lender. Because of that, you might be concerned about attaching your car's title to a loan, which is a significant risk with any title loan. On the other hand, these loans are ideal for someone who can't qualify for a personal loan because of poor credit. You can typically borrow more money with a secured title loan versus other unsecured loan offers.

When thinking about how a title loan works, keep a few things in mind. You can apply both online and in person, and these lending offers allow anyone with a lien-free vehicle to borrow up to $20,000 using that car, truck, or SUV as collateral. Take Texas, for example, as a state that offers these loans. Title loans were never a popular funding option, but over the past few years, we've seen an increase in companies offering loans in the state with repayment terms that let you borrow a large amount with monthly payments that fit your budget. Once you understand how a title loan works, you'll likely realize that these loans can be effective ways to borrow money, but you also need to be aware of the risks of attaching your vehicle to the loan.

What's The Application Process For A Car Title Loan

When you apply for a title loan with Car Title Loans 123, the process is simple for anyone with a paid off vehicle. We'll determine your vehicle's value to see how much you can borrow. Borrow 2% to 60% of the vehicle's resale value, and you can repay the loan over 12 to 48 months. Here's how the online application process works with Car Title Loans 123:

Apply Online: You can complete our online application at any time of the day. We'll need basic details about your vehicle, including the year, make, model, and mileage, your contact information, and your desired loan amount.

Inspection: After we get you pre-approved with a term that works for you, we'll move on to an in-person vehicle inspection. Inspections are often required for car title loans with funding amounts over $4,000. Your vehicle will be inspected to verify its resale value and look for any mechanical or cosmetic problems.

Agree To Terms: Your loan amount and payoff terms are up to you and determined by the vehicle's value. You'll then agree to payment terms, sign your contract, and add your lender as the first lienholder to the car's pink slip.

Receive Your Cash: This is the best part about the title loan application. It happens quickly after you add the lender as a lienholder to the car's title. Some local title loan companies offer cash in hand just minutes after you sign over the title, and you can get your money in person or have it sent by direct deposit in one business day.

Get Cash With A Car Title Loan Using Your Car's Equity As Collateral

Unlike title pawns of the past, you no longer need to give up your vehicle as collateral to a lender. Instead, your lender places a lien on your title and you can continue driving the car throughout the repayment period. This wasn't always the case: just a few years ago, title pawns were common, and this type of loan required borrowers to give up the vehicle itself as collateral. Now you can keep driving your car while making monthly payments with a title loan.

We recommend speaking with a representative who handles title loans first. You complete the payoff when you have made the monthly installment payments. Upon paying the full amount, you will no longer have a lien on your vehicle, and you can get your pink slip back.

How To Find The Right Car Title Loan Lender

Another aspect of car title loans you must understand is how the online application process works. The lender must verify that you're the current owner, which is the most essential component of title loans. A finance company needs to know there's equity in the car and can use that collateral if there's a default. They need to ensure there are no liens or other issues that could affect your title. It would be best if you also verified that the car exists.

Believe it or not, some people try to apply for equity funding without verifying they have a car that's paid off and titled in their name. Like most other types of short-term borrowing, these loans have gotten a bad rap over the past few years. People say the interest rates are too high, or that some lenders will immediately seize your vehicle. This can happen if you fall even one day behind on your monthly payments.

Reputable car title lenders often dispute that interest rates are too high or that these secured loans take advantage of people needing quick cash. They say the interest rates must be high because they won't generally check your credit. If you have past loan delinquencies or other financial issues, that won't permanently disqualify you from a loan. Not only that, but title loans are often highly regulated on the state level with set limits on interest rates and repayment terms.

Car Title Loan Monthly Payments

Car title loans are a great option for people who need money for a financial emergency. However, you can run into trouble when you borrow more than you need and can't afford the monthly payments. Repayment terms vary widely by lender and state and you can typically expect a payoff term of anywhere from a few months up to 48 months. Anyone who gets a title loan with a lengthy payment term like that can expect excessive interest rates, and it won't be easy to repay the loan if you do not pay more than the minimum payment each month.

If you'd like to apply for a car title loan, contact Car Title Loans 123 to learn more about your options. We'll get you a quote using your vehicle as collateral, and you can pre-qualify quickly with a lien-free vehicle, proof of income, and government-issued ID. Get started online or call 844-567-5011 to cash out equity from your vehicle.