What is the meaning of a title loan?

I'm doing a paper for school and keep running into this phrase: car title loan. What is a car title loan?

A car title loan is where a person can use their car title (aka proof they are the official owner of a car) as collateral to get cash fast.
While there are several other types of loans, many require good credit history or a cosigner to qualify. Title loans do not require good credit—or any credit. This means people who normally can’t get approved for other types of loans can get title loans. They are generally used in emergencies to get money quickly.
Title loans are considered predatory by many. Borrowers usually only have between 15 and 30 days to pay the loan back plus interest. The interest rate is usually higher than other loans, too.
Because of this, it can be hard to pay back the loan—and the lender can take the borrower’s car if it’s not paid back on time. Over half of the 50 states have made title loans illegal for these reasons.
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Lauren Smith
Answered on Nov 23, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.

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