What is a Title Loan?
A title loan is a simple loan that uses your car (or other titled property) as collateral. For people with limited credit history, poor credit or simply in need of a quick loan without all the hassles of dealing with a big bank, title loans are an excellent funding source.
Title loans can be used to pay for:
- Anything else you might need extra cash for
Learn More About Title Loans
Title loans are much like other loans you may get from a bank, credit card company or individual. The main item of difference is that a title loan specifically states what collateral is used to secure the loan. In most cases, when people refer to a title loan they are talking about a car title being used as the collateral. At Discount Title Loans in Utah, almost any titled property can be used for a loan.
Our industry is referred to as the “Title Loan” industry simply because a document referred to as a “title” is used as collateral for the loan. The most common titles against which the industry loads is motor vehicle titles. Just like an ordinary auto loan, the borrower can use their vehicle during the term of the loan. A “title” is the document filed with the state’s motor vehicle department that provides legal evidence of the vehicle’s ownership, plus any liens that may exist against the vehicle (such as a bank loan or a title loan).
While title loans may have higher interest rates than a credit card or other loans, they are intended primarily as a short term loan to be used for quick cash in emergency situations, to catch up on bills or to help the borrower through unexpected financial issues. Since the loans are for shorter periods, unlike a 30 year mortgage loan, the amount paid in interest should be affordable.
Title loans are great for people with limited credit history or poor credit. Since the loan is being secured with a title about the only major requirement is that the title is clear of any issues and the vehicle is fully owned by the person taking the loan. Borrowers must be aware that in the event that a title loan isn’t repaid in full, the car or titled property used to secure the loan may be permanently lost since it is required to cover the unpaid loan.
When shopping for a title loan, you as the borrower should be careful to find a lender who is properly licensed and has the necessary credentials to engage in this business. The industry has many lenders who charge exorbitantly high rates of interest. Properly licensed lenders offer a level of protection for you, the borrower. If in doubt, contact the Utah State Department of Finance to verify that any lender you are considering in Utah is properly licensed.
At Discount Title Loans, we make every effort to explain the details and repayment considerations for the loans we offer. Please call us at 801-256-9517.