Car Title Loans

How does a car-title loan work? Is it a safe financial option? You may have heard of car title loan but do not have a general knowledge of how it operates. You have to question if it is the best option for you. Car title loans, are also known as auto title loans, pink slip loans, or simply termed loan title.

A car title loan is a collateral loan wherein, in order to secure a loan, the borrower uses his car or truck as the collateral. A lien will be placed against the car and the borrower will surrender a hard copy of the title to the lender.The borrower is also required to give a duplicate of the car key. When the loan is repaid, the title will be given back to the borrower, as well as the keys, and the lien being released.If for some reasons, the borrower defaults payment of his loan, the car will be repocessed.

A car title loan differs from that of a traditional loan, in that it is a short term loan that carries a higher interest. It can be go up as high as 36% or more. In order for the lender to decide on how much to loan, he will review the credit history of the borrower and will at the value and condition of the car. With this being as said, a car title loan is considered a high risk loan for both lender and borrower.

It takes only about 15 minutes to seal the deal in a car title loan. The borrower can get to as low as $100 to $10,000. Because of the risk involving some borrowers, credit unions and traditional banks are not inclined to offer these type of loans to several people. Because of this, borrowers are still being required to show as proof a steady source of employment and income. After this information is verified, the vehicle of the borrower is appraised and inspected before the funds are released.Usually, the lender gives the borrower 30% to 50 of the value of the unit. This arrangement leaves an allowance for the lender just in case the borrower default on the loan, and the lender will have to sell the borrower's car to regain his profit. There are other conditions to determine the amount of the loan, like the resale value of the car, the unit should have been paid in full, and it should have an insurance.

Usually, full loan repayment is due in 30 days. But if the borrower needs more time to repay, the lender will work out a separate payment schedule. If in case the borrower still cannot pay the balance of the loan the second time around, he can rollover the loan and take out a new loan with much higher interest. For more info, read http://www.ehow.com/facts_6077436_can-one-car-title-loan_.html.