Auto Title Loans 101

Although it depreciates in value over time, you can use your car to take out some cash. The most common type of loan way that you can use on your car is the auto title loan.

An auto title loan is a short term loan that allows you to pledge the title to your car in exchange for some cash. If you are not able to pay the loan per your agreement, your lender will take hold of your car as payment of the debt. In general, it’s the lender who decides how much cash you are going to have in exchange for your car.

Auto title loans are small loans that you have to repay over the short term. Before you take out an auto loan, you should know that the terms of an auto title loan is often more advantageous to the lender than to the borrower, and you are actually putting a lot of things at risk for such a small amount.

Car title loans are called as such because you pledge the ownership or title of the car in exchange for the loan.

As a short-term loan, you will probably have to repay the car loan in 30 days, although sometimes you can renew it after 30 days and pay later. Take note that regulators generally limit the number of times you can renew your loan.

One of the biggest drawbacks to car title loans is the high interest rate. Because of the high interest rates, each state has its own special limits on this type of loan.

Before you apply for a car title loan, take note that there is a great risk of losing your car to the lender, so you should only take apply for this loan when you have the capacity to repay the loan.