What has four wheels and can get you a loan fast? It is a car and you can get a car title loan when you don”t have any other means of credit.
Sometimes meeting the strict financial requirements of banks and other more traditional lenders is extremely difficult. If you’re having trouble building your credit score or have no credit history at all, getting a loan from the bank is nearly impossible.
Thankfully, there are many alternative options available to those who are dealing with a financial emergency and need money quickly. Car title loans are a fast and easy way to secure a car loan for those struggling with poor credit.
No. They are different things.
Car title loans (aka: auto title loans) are a form of credit Canadians can use to get a lump sum of cash. Like a personal loan, it is repaid in installments over a period of time plus interest.
However, unlike a personal loan, it is secured against the title of your car. Meaning, if you default on any payments, your lender has the right to seize your car to recoup payment.
To qualify for a car title loan, you’ll need to own the vehicle outright. That means that you cannot borrow against a car you are still paying off or leasing. Simply put, you cannot put another debt on top of one you already owe on the car.
Other than that, it’s fairly easy to qualify as lenders don’t usually require a credit history. Moreover, car title loans usually take a day or two to process.
They are a viable short-term solution if you need cash for an emergency.
Car title loans (aka: auto title loans) are secured loans, with term lengths that vary between 3 months to 3 years.
Car title loans typically have high-interest rates, which can legally go as high as 60% (APR). When you take out a car title loan, your lender will assess the value of your car and use it to determine how much to lend to you.
Typically lenders will lend up to 50% of your car’s value. However, the loan amount can be as little as $100 in some places and run as high as 75% of the Kelley Blue Book (KBB) resale value of the vehicle.
Once the borrower and lender come to an agreement, a lien is placed on the vehicle and is only lifted once the loan is paid off in full. Again, there cannot be any existing liens on the car when you apply for a car title loan.
As a borrower, you can take advantage of the fact that your vehicle is an asset and can use it as collateral to secure the loan you need. Loans against a car title are often easier to be approved for because they are secured, which makes it a great option for credit-constrained individuals.
The lien is what makes a secured car loan, secured. It is a type of security interest that is placed on the car. It’s meant to help ensure that the borrower will, in fact, make their loan payments on time.
If the borrower stops making payments on their loan or cannot afford to pay the loan off in full, the lender can legally repossess the car and sell it to recoup the cost of the loan.
You can also voluntarily surrender your car.
An auto title loan is pretty straightforward. There is usually any number of companies that provide loans against a car title in your town and many now do business online.
You simply fill out a short loan application. Although there will be some differences depending on which lender you chose to work with, most will require:
Thinking of trading in your car? Find out if you should trade-in your used vehicle or not.
Getting approval for a car title loan is, generally speaking, easier than getting approved for an unsecured loan. However, like any other type of loan, there are a few requirements that need to be met.
If you have a low credit score then an auto title loan is probably the easiest way to get a loan. Your weak financial profile is offset by the fact that the car loan is secured, and as such, your application will appear far less risky to the lending officer who is reviewing your file.
Car title loans are found both online and at physical locations near you. However, it is easier to find auto title lenders online in your area than in a physical location.
| BHM | |
| Loan Amount | $1,000 – $15,000 |
| Terms | 12 – 60 months |
| Funding Time | Less than 24 hours |
| Eligibility | – Car must be less than 8 years old – Car must be paid off – Car must be insured – Clear title |
| Documents Required | – 2 valid photo IDs – Proof of income – Proof of address – Photos of vehicle and vehicle’s odometer – Proof of insurance – Proof of ownership of the vehicle – Void cheque – 5 References |
| Geographical Availability | Across Canada |
| Apply Today |
There are several benefits to this type of financing if the borrower doesn’t abuse the option.
The disadvantages are less than they used to be since provinces have passed some legislative reforms. Some provinces have placed a cap on the amount of interest a title loan company can charge. There is also legislation as to the maximum loan amount in some jurisdictions, as well as the number of these loans a consumer can take out within a year. The disadvantages mainly have to do with not understanding the terms of the contract, not making payments in a timely manner, or taking on a loan that you can’t realistically afford. Additionally, you should watch out for:
Learn more about your rights and responsibilities as a borrower.
While car title loans have numerous disadvantages, they can be overcome by doing the following:
If you’re in need of a loan fast and have been rejected by the bank and other lenders then a vehicle title loan could be the solution you need. Title loans are short-term easy to pay off loans and therefore are a great option when your income is tight but life is still happening. The convenience of a car title loan will allow you to deal with whatever emergency or financial needs you might have right away.
If you’re interested in more information or want to start the process, Loans Canada can help.
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