What’s a car title loan?

I’m looking to get some extra cash to cover a few bills and a friend of mine recommended that I get a car title loan. I don’t really understand what that is based on how she explained it. What is a car title loan?

Answer
A car title loan is a loan for a small amount of money, for a short time that involves a driver giving a lender the title to their vehicle in exchange for borrowing a sum of money. The driver then makes payments on this loan like any other, with their car’s title as collateral. Failure to pay this loan will result in significant damage to the driver’s credit score and repossession of their vehicle.
Before getting a title loan, you should know the following information:
  • Car title loans are illegal in 34 states due to their tendency to drastically take advantage of those applying.
  • Title loans have an average annual percentage rate (APR) of 300%, which means that the typical car title loan costs three times the amount you borrow.
  • You can usually borrow 25% to 50% of the overall value of your car, but the average loan amount ranges from $100 to $5,500.
  • The average title loan term is just 30 days.
The truth is, title loans are usually not worth the money you borrow. If you want to look for safer ways to save cash, check out the Jerry app and see how much you can save on your [car insurance] premium.
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Chloe Jenkins
Answered on Nov 05, 2021
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