What is a Title Loan?

What is a Title Loan? This is a question we get asked on a daily basis and in this post will do our best to answer it.
In its simplest form, a Title Loan is a way for you to borrow money using the equity in your vehicle as collateral. You must own your vehicle and have no liens on your vehicle Title to get a Title Loan (you can’t have an unpaid car loan). In general, you visit a Title lender, allow them to hold your vehicle title as collateral, and borrow money at terms agreed to by both parties. Different states have different regulations and different lenders have different terms; so if you are interested in a Title Loan it pays to do a bit of research first.
Why do Title Loans exist?
Car prices have risen considerably over the past few decades and for many people they have a significant amount of equity in their vehicle after they have repaid the original vehicle loan. Additionally, the number of households with enough savings for an emergency has decreased during the same period that vehicle prices have risen. So, for many people, being able to access the equity in their vehicle for emergency expenses is a worthwhile benefit.
When you take out a Title Loan in Virginia, you will have a monthly payment similar to a regular car loan. The big difference is the Interest Rate. Interest Rates on Title Loans can be very high, over 200% APR in many cases, making repaying them very costly. Often the interest will amount to more than the original loan; meaning if you borrow $2,000 you may end up paying back over $4,000. This is the main reason we started Fast Title Lenders; to provide a lower cost alternative for those who need to access the equity in their vehicle but cannot afford to pay triple digit Interest Rates. For more information on Title Loans and how they work visit our site and read our other blogs, or feel free to give us a call.