There are many reasons why people take out title loans. Sometimes a person has an unexpected expense, such as medical bills, that need to be paid for. Other times, people just want some extra cash to get through the week.

Title loans are loans for small amounts of money. Your car title is put up for collateral. These loans usually have high interest rates and are for shorter periods of time than most conventional loans.

There are many companies that offer title loans. Many of them are conveniently located in your city and other neighboring towns. Some businesses offer online title loans with no store visit. They may require you to set up a user account to log in by providing some basic contact information.

Here are a few facts to keep in mind about title loans:

  1. Title loans can be taken out regardless of your credit score. Because title loans are short-term loans, they are not dependent on your credit score. You don't even need to have any established credit in many instances. Title loans also have no impact on your credit score. If you don't pay off the loan on time, the lender has legal right to your car. That's why it's important to pay off these loans on time, or even ahead of time if possible.
  2. The turnaround time for title loans is quick. Title loans are a relatively hassle-free experience. You can usually get the money you need the same day. There's no background check or waiting period to worry about. You have access to your cash right away, and you can start spending it the same day if you'd like.
  3. You don't need to fill out a lot of complicated forms. Most companies will just ask for a simple form to be filled out. There are no complicated forms that have to be filed out in triplicate. They will ask for proof that you own the car, and may inspect the car's condition in some cases. If you're applying online, the lender may ask for you to take your car to a local dealer to have it inspected.
  4. Title loans are based on the approximate worth of your car. The amount of the loan you will receive depends on the approximate value of your car. Don't expect to get a loan for the full market value. In many cases, title loans are offered at about 20-50% of the car's total value right now. This makes it easier for the lender to make their money back. It's probably best not to get a title loan that's at 50% of your car's value or higher, because that can increase your risk of losing your car if the loan is not paid on time.
  5. Beware of higher interest rates and fees. A typical title loan will have an interest rate of 25% or more. There may also be additional fees or interest charged if you are late on your loan payments or the loan is not paid on time. Some lenders will allow you to roll your existing loan into a new loan. Just keep in mind that this new loan may also have additional fees and an even higher interest rate than your previous loan.
  6. Title loans can be beneficial in the short term. Most title loan terms are for 30 to 60 days. If you're waiting on a paycheck to pay the loan off, then a title loan can be a good way to get some extra cash in a hurry. If you're unemployed or are having a tough time making ends meet, a title loan may not be in your best interest. Missing a payment or defaulting on the loan can cause additional fees and interest to be assessed. You could also risk losing your car in the process.
  7. Title loans are a win-win for lenders. Title loans are a relatively low risk for banks, credit unions and other lending institutions. The loan terms are short, and they often recoup the initial investment plus any additional interest or fees in the process. If their customer pays late or defaults on the loan, the lender can legally take their vehicle that was offered as collateral on the loan. The lender can turn around and sell the vehicle for a quick profit if they so choose.

These are a few important facts about title loans. They should be considered as a short-term option instead of a long-term financial solution. Read the contract carefully before signing it, so that you are aware of the terms and any potential penalties for late or missed payments. Title loans offer flexibility and freedom for many people every day.