Secured Auto Title Loans

There comes a point in time that you may be so broke or have an adverse credit history that even obtaining a loan in a conventional manner is hard. This might be because you have bad credit or do not conform to the term and conditions of obtaining a loan. In such instances, borrowing an auto title loan is usually the most straightforward step. A secured loan is a type of loan in which the borrower agrees to use some type of personal asset as collateral, usually a car, van or other vehicle. A secured auto title loan in this case is a loan where the borrower provides his/her title as collateral for a loan. This means if you default on payment of the loan, then the company you borrowed money from could repossess your car or vehicle held as collateral.

Like other loans, it acts as an emergency loan. However, unlike other forms of loans, an auto title loan is short term in nature and tends to carry a higher interest rate. This is because the lender does not check the credit and the only consideration is the value of the car. It ought to be noted that most auto title loans are usually designed for a short period of time, thus the repayment period is anywhere between 14 days to 1 month of the loan being issued.

How secured auto title loans work
First and foremost, in order to obtain an auto title loan, you must own a vehicle that is free of any lien. In normal circumstances, you usually have 30 days to repay the loan otherwise the title lender will reclaim your car until you are able to make good of the loan. Most auto companies lend 20-50% of the value of the car. This means that even if you fail to repay the loan, they stand to benefit when they decide to sell your car. In this case, once you borrow the amount, you are required to repay it within 30 days. Where you fail to do so, the company repossesses the car as mentioned above. In some instances, the borrower may be required to pay a certain fee to roll the loan over. This means that the borrower can take out a new title loan. However, this type of practice is forbidden by many states, as it tends to put the borrower perpetually in debt.

It has been argued that title loans can be a very high financial risk for borrowers. This is because most borrowers tend to borrow a lot more money than they actually need. In such instances, the lenders stand to benefit as the borrowers take out an amount far less than the value of their cars. When they fail to pay the loan, the lender still gains.

Benefits of using a secured auto title loan
It may seem that auto title loans are not a good idea because of its repayment plan and high interest rates. However, that is not the case, as, believe it or not, auto title loans have benefits too. The biggest benefit in that regard is that it enables one to get money that is needed quickly. This is due to the fact that the application is processed within 15 minutes, provided you meet the criteria and terms and conditions. The lender looks at your car to make sure that it is worth at least the amount that you want to borrow. The other benefit is that anyone who owns a car can get the loan, regardless of bad credit or not. This means you still get to drive your car even after taking out the loan.