Car title loans have been around for years and yet the most common question we hear is “how do car title loans work.” Much like payday loans and installment loans, a title loan offers you a way to get a lump sum of cash quickly. There are a lot of things that make car title loans different from typical short-term loans. The most significant difference is that you’re securing your vehicle to 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 pink slip loan, you can get a lot more money than you would expect if you went to a bank or credit union.

How Does A Title Loan Work

You might be concerned about attaching your car’s title to a loan that may have been unsecured. There are a few things to remember with a title loan when you’re thinking about how they work. With the advent of online lenders, more companies are ready and willing to offer money for your vehicle’s pink slip. Take the State of Texas as an example. In just over a decade, they’ve added hundreds of lending locations, and you can now apply for your loan and complete all the paperwork online. After that, it’s just a simple matter of doing the vehicle inspection and picking up the cash. This means there’s more competition, and lenders have much more flexibility when getting competitive rates and financing amounts for online car title loans.

A Car Title Loan Gets You Cash With Your Vehicle Equity

Ultimately, it pays to find the best form of funding that fits your needs. Also, you no longer have to worry about giving up your vehicle to get access to cash. It used to be that to get an online advance, you would have to give up your car. How would you get to work or run the everyday errands that come about each day? With all title lenders today, you can rest well knowing you will keep your car as long as you stay current on your monthly payments. There are many choices available to you. But we recommend first speaking with a representative who handles title loans. You finish the payoff when you complete the monthly installment payments. Upon paying off the amount in full, you will no longer have a lien attached to your vehicle and you can get the pink slip back.

Find the best car title loan lender that wants to work with you!

Another aspect of car title loans you must understand is how the online application process works. The lender must verify you’re the current owner, which is the most important component of how title loans work. A finance company needs to know there’s equity in the car and they can use that collateral if there’s a default. They need to ensure you have no liens or other issues that could impact your title situation. You also need to verify the car exists.

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

Most reputable title lenders and RV title loan companies will dispute that interest rates are too high or that they’re taking 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 always disqualify you from a loan.

Car title loans work well when you make on-time monthly payments.

Keep in mind that car title loans are going to be expensive and should be solely used for a short term financial crisis. It’s good to know you have equity in your car that could be used as collateral. But you don’t want to find yourself in a situation where you took out a pink slip loan and fell behind on your payments. When you get to that point, you risk losing your car and owing money on the outstanding amount you borrow! Don’t fall into this position. It’s essential to pick the best title lender so you don’t have to deal with such situations. The application and underwriting process is easier once you find a decent company to work with. Most lenders of car title loans online will try to work with you if a payment becomes past due.

Another thing to remember is that you have rights as a consumer. Did you fall behind on the money payments? If your car gets repossessed, the lender still has to follow specific handling rules. We urge you to seek legal assistance if you are dealing with this scenario. Look into other options like bank loans and even small business loans if you own a company. The US Government has a great website that profiles different SBA financing options. Secured loans are useful for a financial emergency, but you should only borrow money if you know what you’re doing.