What is a title loan?
There are a lot of collateral types that one can use as security for the borrowed amount. Certificate of ownership of various appliances, jewelry and vehicles are often favored by financing companies. The most common and reliable collateral type used is a title, most often the title could either be for a lot or vehicle. Once the title is verified to be genuine and not used in other financing applications; it is likely that your loan application will be immediately processed and your title loan will be approved without any doubt.
Title loans however are not often preferred by most borrowers, especially if the need for money is not urgent or there are other alternative loan sources since a title loan is generally associated with higher interest rates. This high interest rate is attributed to the fact that there is no background check done on the property, lot or vehicle. The condition will be solely based only on the title documents given to the financing company in return for the loan.
This type of loan is also quite risky for the financing company since it will also not do any background check on the borrower themselves nor will the company consider the credit score of the borrower. As long as there is a reliable and clean title presented, it is likely that your title loan will be approved immediately.
Although title loans have higher interest rates, compared to other types of loans, there is a fixed term or contract of payment. Often, the contract is below one year in length, thus the borrower will not have to worry and struggle to pay back the title loan for a long time. Aside from fixed payment for contract, there are also no other additional payments to be done by the end of the contract. Therefore, once your contract ends, your title loan is also paid in full.