What is a Car Title loan?
A car title loan is a temporary financing tool that can be used by borrowers with low mortgage lending by placing their car as collateral for a loan. While the standard route for using a car is safe, some suppliers allow other vehicle modes, recreational vehicles, or motorcycles to be used as well. According to the definition, however, to obtain a car title deed, the borrower must be the owner of the title deed of the vehicle.
How it works is that if the borrower has decided to get a car deed loan, he or she must hand over the title deed and a copy of the car keys to the lender for the duration of the loan. Because this is a secure loan (defined as one where the value is driven by the underlying asset that is the car in this case), there needs to be an innumerable amount in the car. In simple terms, this means that the owner must have a balance in the car. Equity status can be satisfied in two ways:
- By purchasing a car directly for cash, in that case, the ownership of the car will transfer to the buyer immediately;
- By repaying all the car loan, in which case the ownership of the car will transfer to the buyer after paying all the debts from the lender;
How does the Car Title Loan work?
When a borrower approaches a borrower and expresses his or her desire to obtain a car title deed, there is an application process in which the company will request credit processing details. Generally, this information includes:
- Borrower’s name, permanent address, and contact details
- Make and model of the vehicle being pledged as collateral
- Mileage of the vehicle
- Insurance documents
- Job details
- Proof that there are no other rights or claims in the vehicle
- Vehicle valuation documents / inspection documents
The size of the loan itself is very small as it is a loan commonly used by low-interest lenders for the purpose of financing emergency expenses. In general, improving the model and making the model smaller with mileage, increases the number of loans that can be obtained.
Similarly, the repayment period also varies for all borrowers, where some borrowers may choose to repay the car title loan within weeks while others may choose to borrow up to a year, or maybe more.
Once the details have been provided and the car has been valued, the borrower receives the principal amount directly into his or her bank account or as a check that can be deposited in the bank within 1-2 business days. A car title loan can then be classified as a temporary loan or as a lump sum loan at the end of the term. In some cases, if the borrower is unable to repay the loan at the end of the term, he or she may transfer the loan to the new term at a higher rate.
However, if at any time, the borrower fails to make a fixed payment on the loan, the lender has the right to take out a car to repay the loan costs.
If the value of the vehicle is more important than the loan amount, then the borrower will receive the remaining amount after the car has been sold and the lender has been paid in full. Alternatively, if the vehicle is importing less than the remaining loan amount, then the borrower may be on the verge of making a difference in other provinces.
For this reason, some lenders often set the car value parameter to be twice that of the extended car title loan value, even though this amount differs from the lender. In some cases, the car may be equipped with a GPA and/or car immobilizer to further protect the lender in the event of a borrower’s default.
If research on various car title loans takes a lot of time, otherwise you can apply in advance with Smarter Loans and we will look at the car title loan offer and give you the most relevant. Eazy Cash offers services including Cash Advance, Installment Loans, We Buy Gold, Car Title Loans, Cheque Cashing, Western Union Money Transfer, and Prepaid cards in Ottawa.