Collateral Loans: Title Loans

If you want to use a vehicle that you own free and clear to obtain a loan, there are some risks involved regarding collateral loans that you should consider carefully before you decide to use this type of financing.

Collateral Loans

Title loans are an example of a collateral loan. Below are some of the different names that refer to a title loan:

  • Car or auto title loan
  • Cash title loan
  • Loan for title program

All of these are the same type of loan, one for which you pledge your car or other auto that you own free and clear to secure a collateralized loan. The rate that you pay is almost always much higher than that of a standard loan, because the term of repayment is usually around 30 days and there is no credit investigation involved.

Be very careful before you use a collateral loan for your monetary needs. Understand the repayment terms and make sure you do not fail to pay on time, or your collateral will be lost. Since there is not much investigative work done by the lender before it makes these loans, it usually does not give you the benefit of the doubt if you are unable to repay on time.


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