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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?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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.
If you have any other questions about cars or car insurance, you can submit a question to us. Or you can download the
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- Gregory R.
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