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LOS ANGELES, Nov. 30, 2021 (GLOBE NEWSWIRE) – Title loans offer car owners a quick and often easy way to get a loan. Many lenders have lenient credit score requirements and take the value of the car into account when determining loan amount and eligibility, and borrowers can often get their loan within one day. Here’s how title loans work and three things borrowers should know before applying for a title loan.
How does securities lending work?
A title loan is a secured loan that uses a borrower’s car title as collateral. These loans often come with easy applications and quick approvals, so borrowers can receive funds the same day they apply. Since the borrower secures the loan with the title of his car, this makes the loan less risky for the lenders. This means that borrowers with poor or fair credit can still be approved.
What to know before applying for a title loan
Here’s what borrowers need to know before getting a title loan:
1. Car loan and ownership status
Title loan borrowers must own their car for free, which means they’ve paid off all existing car loans. Borrowers who do not own a vehicle may not be eligible for a title loan.
2. Loan amount
Lenders primarily use the value of the vehicle to determine the loan amount, but they do not offer the full appraised value. Instead, they usually lend around 25 to 50% of its value, depending on the lender.
For example, if the lender values a borrower’s vehicle at $ 20,000, that lender might offer $ 5,000 to $ 10,000. However, if the borrower needed $ 20,000, they would either have to bring a more valuable vehicle or consider another loan option.
3. The borrower can keep his car
One great feature of securities loans – besides being quick and easy to obtain – is that the borrower can continue to drive their car while the loan is in progress.
Thus, the borrower can get the money he needs without giving up his means of transport. But before taking out a title loan, the borrower should make sure that he can repay the loan on time and in full. Otherwise, the borrower would risk losing his vehicle.
The bottom line
Title loans can be a great financial option for vehicle owners. Borrowers who own their vehicle and have a car of sufficient value to get the loan amount they need will find them useful, especially since they can continue to drive their vehicle.
Notice: The information provided in this article is for informational purposes only. Consult your financial advisor about your financial situation.
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Source: Advancing America