What Is a Car Title Loan?

Many of us have often found ourselves in need of fast cash in between paychecks. Those getting paychecks on a monthly basis often discover the money has run out before the bills are all paid by the end of the month. Families often are in need of extra cash to tide them over before the next paycheck. One of the ways to obtain fast cash is by securing what’s called a car title loan.

Almost all cities have numerous services which specialize in providing quick cash to individuals and families via a method called an automobile title loan. The way this process works is to simply going to the loan office with the car title in hand and ask for a short payday loan. These cash loans are often in the mouth of $ 500-$ 1000 and usually repayment is required in 30 days. They are meant to simply tied one over until the next monthly paycheck arrives.

The car title is used as collateral for the loan. The loan company will require that there not be another lien on the car title and that sufficient equity is built up in the car to cover the loan. Additionally, the loan service company will require access to your checking account electronically. This is how they will recover loan repayment instead of having you write a check were coming into the office and paying them cash. At the time you both agree on the repayment of the loan, the loan service company will simply a lecture on a clean withdraw the principal and interest from your checking account.

Many times this repayment on a $ 500 loan will be $ 550 or as much as $ 575. Of course if you catch you lately annual percentage rate of interest alone repayment of this amount with the principal having been only $ 500, you can see that the annual percentage rate of interest is quite high. But the good news, is that there usually are no credit checks and the money can be accessed immediately upon application and submission of the quick loan application.

Before applying for and using your car title as collateral for a loan make absolutely certain that you will in fact be able to repay the cash advance loan. Should the loan payment not be made on time, the loan servicing company has the right to repossess your car and sell it. They would take the proceeds of the car and pay themselves the loan amount due and then, as required by law, turnover the rest of the proceeds to you. Of course not only does that leave you without a car, it also damages your credit rating for future loans you may wish to get at regular banking institutions.