Making Sense of a Car Title Loan and its Use for You

Do you find yourself in need of additional funding? It's more than likely, considering the current state of the economy and the number of people who have lost their jobs. What are you to do if you find that you need extra cash? What happens when your paycheck is not enough to cover your monthly bills? What happens when an emergency strikes and you lack the funds to pay for it? If you own your vehicle outright and have no liens against the title, you can find the cash you need through an innovative lender. A car title loan can give you the help that you need to meet your obligations.

What is a car title loan? How can this lending product be of use to you? If you've never heard of a title loan before, you might feel a bit leery of it. However, these lending instruments are highly beneficial and might be your only choice. Of course, prior to attaining this type of loan, you might wish to pursue other options. You can ask your family and friends for financial assistance. You can attempt to get a loan from a traditional lender. You might even decide to have a yard sale and build up the money you need that way.

However, a car title loan is not only more beneficial than these other methods, it is also faster and simpler. What exactly is a title loan, then? This lending instrument is actually quite simple. You give the title to your vehicle to a lender, in exchange for a loan. The lender then holds the title as collateral against the repayment of the loan. Obviously, if you fail to repay the loan, the lender keeps your vehicle. Usually, they will sell it to recoup their costs involved in giving you the loan in the first place. However, if you repay your loan, the title is then back in your hands and everyone is happy.

Secured lending (lending based on the provision of collateral) is nothing new. Quite a bit of the modern world operates on this form of lending. In addition, secured loans and other collateral-based financial tools can be enormously beneficial, ensuring that both parties are satisfied. A car title loan can be an invaluable tool when you need a bit of cash to get you through until your next payday.

How do title loans work? As stated, you provide your title to a lender. The lender will then evaluate the vehicle's worth, based on its age, the mileage on the vehicle, the vehicle's condition and maintenance level and the estimated value of it as provided by a third-party source, such as Kelley Blue Book. Your lender will then extend a loan to you, ranging from 50 to 80% of the vehicle's value. This can give you several thousand dollars toward your expenses.

What can you spend the money on from a car title loan? You can use it to make restorations to your home. You can use it to pay for emergency medical expenses. You can use it to buy school clothes for your children. The uses to which it can be put are limitless. Unlike other forms of lending, a loan based on your car title can be spent on anything you wish. You do not even have to inform the lender of the use you need the money for. Whether you need to pay a deductible, or pay for services outright, whether you need to pay your tax bill or simply want to treat the family to a nice vacation, this financial tool can provide you with the means to do just that.

Of course, there are a couple of caveats to using a car title loan. These are short-term loans. This means that they are designed to be repaid in a relatively short time period. Usually, most title loans are supposed to be paid off within 30 days. Of course, you can often extend the loan, but this will incur extra costs in the form of interest and additional lending fees. When used correctly, a title loan can give you a considerable amount of cash and as long as they are repaid on time, everyone benefits greatly.

Are there any restrictions on the type of vehicle that you can use? Actually, there are a few conditions that must be met. For instance, the vehicle cannot be so old that a title doesn't need to be present for a sale to occur. In addition, the title to the vehicle must be clear – you cannot owe money on it, nor can there be any existing liens against the title. If you meet these criteria, you can make use of a car title loan and get the cash that you need.