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Title Loans

What Is A Title Loan & How Does It Work?

By June 17, 2022June 24th, 2022No Comments
how title loan works

What Exactly Is a Title Loan?

A Title Loan enables you to borrow money based on the worth of your car if you possess the title. Your automobile is used as collateral for the loan, allowing you to immediately acquire the money you need and continue driving while repaying your loan. Individuals seeking a quick answer to short-term financial issues can consider title loans.

Get the cash you need while keeping your car on the road.

Oak Park Financial’s title loans give you immediate cash, depending on the assessed value of your car. Our rates make it simple to receive the money if you own your automobile and have the title—no need for a bank account. The availability of title loans varies by state.

What are the benefits of a title loan?

Here are a few reasons why a Title Loan might be a good fit for you:

  • The application is simple.

It’s simple to apply for an Oak Park Financial Title Loan. Bring all relevant paperwork to an Oak Park Financial shop near you, including your vehicle title and government-issued identification. The worth of your car will then be determined by shop staff.

  • Quickly get cash

You will have immediate access to the money you need if you are accepted for an Oak Park Financial Title Loan. You may leave our shop with cash in your hand and continue to drive your car while repaying the loan.

  • It is not necessary to have good credit.

You don’t need an excellent credit score to be accepted for a Title Loan since Advance America analyzes various variables besides credit score. Borrowers with bad and fair credit are accepted.

What Is the Loan Process?

If you own your car entirely and have a lien-free title, you may apply for a title loan via a lender that provides them. Throughout the application process, you’ll need to present your lender with your automobile, evidence of ownership (your car title), and your driver’s license.

You’ll give over your vehicle title if authorized. While the lender determines your loan terms, title loans often have 30-day periods, comparable to payday loans. This implies you’ll make a single lump-sum payment after your loan term. You’ll have to pay back the borrowed money, interest, and fees.

This is where title loans might cause problems. If you don’t pay back your loan on time, you risk losing your automobile, which acts as collateral. If you decide to take out a title loan, pay it back on time to avoid losing your asset.

When Is It Appropriate to Take Out a Title Loan?

According to the Consumer Financial Protection Bureau (CFPB), 20% of auto title loan customers have their vehicle confiscated if they do not pay back their debt in full. Borrowers who regularly take out new loans to pay their previous ones make up most of car title loan providers’ business. More than half of vehicle title loans turn into long-term debt, and more than four of five auto loans are reborrowed because borrowers cannot pay them off in full with a single payment.

As a result, you should consider other financing options before taking out a title loan. Credit union alternative payday loans, personal loans from internet lenders, credit cards, and even borrowing money from friends and relatives are better choices than losing your vehicle.

What is the maximum amount of money I can get?

The amount of money you may acquire with a Title Loan is determined by the condition of your car and any applicable state rules. Remember that, depending on your state, the amount of a Title Loan given may be determined by your gross monthly income. To find out how much of a Title Loan you could qualify for, visit our title loan calculator.

Your loan limit might range from 25% to 50% of the car’s entire value, and the lender will inspect the vehicle to assess its value. Some loans are as little as $100, while others may be as much as $10,000 or more.

Rates and conditions of a car title loan

The amount of money you may borrow with a Title Loan and the rates and conditions that come with it differ by state.

For your convenience, we’ve included a title loan calculator below. It does not imply that you will be accepted for a Title Loan or that the amount of your Title Loan will be the same as your estimate.

What are the requirements to get qualified?

Please bring the following materials to an Oak Park Financial office near you to apply for a vehicle title loan:

  • Government-issued identification
  • Vehicle Information and Title
  • Proof of Address (Utility Bill)
  • In certain states, proof of income, car registration, and insurance may be needed.

Learn more about what your state requires.

The Benefits and Drawbacks

Examine the benefits and drawbacks of a title loan before taking one out. This might assist you in determining whether or not it is the appropriate option for you.

Advantages of Title Loans

  • The majority of title loans do not need a credit check. There is excellent news if you need cash and have explored all other options but haven’t strong enough credit to qualify for a typical loan.
  • Quick approval and funds: Lenders may assess your application and car in only a few minutes because there is no credit check. After you’ve been accepted, you may expect to receive payments within a few days.

The Drawbacks of Title Loans

According to the Consumer Financial Protection Bureau, more than half of vehicle title loans become financial burdens for borrowers. This implies that debtors keep taking out new loans to pay off previous ones, trapping them in a never-ending cycle of debt. It’s damaging and hazardous since it keeps you in debt for months after you’ve borrowed the money.

  • Exorbitant interest and expenses: Due to interest rates, financing charges, and other fees, APRs for title loans may be as high as 300 percent. These fees pile up, making your financial commitments even more challenging to meet.
  • Short payback terms: Most title loans have a 15- to the 30-day repayment period. On the other hand, traditional loans often have payback durations ranging from six months to three years, depending on the amount borrowed. A 15- to 30-day payback term may not be long enough to acquire the finances to repay your loan, especially given the high APR.
  • You may lose assets: Car title loans might put you in a bad situation, forcing you to choose between continuing to accrue a large debt load and surrendering your vehicle. To prevent the possible hassles that title loans might entail, stay on top of your payments.

What other options?

Almost every other alternative is almost certainly preferable to a title loan. Here are a few options if you’re in a pinch and need cash.

Credit unions

Federal credit unions provide payday alternative loans and small-dollar loans (not all credit unions are national). They’re comparable to title loans, except they don’t need security. These loans include smaller amounts but more flexible payback arrangements, such as monthly installments spread over a few months.

For federal credit unions, you may borrow anything from $200 to $1,000, and interest rates are typically set at 18 percent. Furthermore, credit unions are more likely to cooperate with consumers with poor credit to find the best option for them. To acquire an alternative payday loan, you must be a credit union member.

Personal Loans

Personal loans are often unsecured loans obtained through a bank, credit union, or internet lender. You may use them for almost anything, and many of them will release funds as soon as the next day once you’ve been accepted. You may be able to get a personal loan even if you have bad credit.

While personal loans have interest rates, they are often cheaper than title loans, with rates averaging approximately 36 percent. However, if you have bad or damaged credit, you’ll only get the highest rate on a personal loan. Borrowers with solid credit may get rates as low as ten percent. Finally, payback durations range from two to seven years, allowing you to make feasible monthly payments until your loan is paid off.

Using a Credit Card

When you apply for a credit card, you will be accepted up to a particular credit limit that you may use as required. You’ll be required to pay off your amount every 30 days and be allowed to utilize your available credit limit. Unpaid balances will start accruing interest; credit cards have substantially cheaper interest rates than title loans.

You’re effectively borrowing an interest-free loan if you can afford to return your debt regularly. Some cards even provide interest-free financing for a specific time, such as the first 12 months of card ownership. Taking advantage of a deal like this is a convenient method to take advantage of low-cost financing.

Family and friends

To avoid slipping into a title loan trap, ask around your circle whether you may borrow a little amount of money. Your loved ones are unlikely to charge you exorbitant interest rates as payday and title lending firms do. They’re also accommodating enough to set up a repayment plan that works for both of you.

Borrowing money from family, on the other hand, might put a burden on your relationship, both emotionally and financially. Take this path with prudence and a repayment plan to ensure everyone is satisfied with the outcome.

Why would you want to borrow money from a title lender?

Obtaining a title loan is more straightforward than receiving funds from other means. A title loan allows you to get the money you need by using the value of your automobile or motorbike as collateral. You may obtain up to $10,000* cash for your title at Oak Park Financial. You may keep driving your car or motorbike throughout the loan/pawn period.

Personal loans are another option for any unanticipated or urgent cash need. Our loans may be the ideal alternative for paying unexpected bills quickly due to their higher flexibility and short application procedure.

In most states, you may acquire a personal loan from Oak Park Financial for up to $2,500. You could have enough money to get by, but you’ll need extra cash in an emergency. Or maybe you’ve had a tough month and want immediate cash to tide you over until your next payday. Regardless, there are many methods to generate additional money, but an Oak Park Financial title loan, title pawn, or personal loan is one of the easiest.

What makes Oak Park Financial a good choice?

Oak Park Financial is committed to providing its clients with the most cash and the best interest rates. Furthermore, Oak Park Financial has been a dependable consumer lender for many years, assisting thousands of customers in obtaining cash when they want it. You don’t need excellent credit to use Oak Park Financial, and you can have some money in as little as 30 minutes. With Oak Park Financial, getting a title or personal loan is quick and easy!

How can I trust Oak Park Financial with my personal information?

For almost 20 years, Oak Park Financial has been a trusted consumer lender, and we take great care to protect our clients’ sensitive information. With Oak Park Financial, your information is kept as secure as possible.

What can I do with my vehicle title to generate money?

Your credit history acts as collateral for typical bank loans, determining how much money you may borrow. However, having terrible credit, or even no credit at all, is quite common. In most jurisdictions, Oak Park Financial uses the title to your automobile as collateral rather than your credit history. 

As a result, when you hand us your automobile title, we pay you cash. To be authorized for a car title loan or pawn, you must have a vehicle and the title to the car. After that, you receive your vehicle title back after repaying the loan/pawn. A vehicle title loan is a quick and easy method to borrow cash, but there are many other options.

What does it mean to have a lien-free automobile title?

A lien-free automobile title indicates that you own your vehicle entirely and that there are no outstanding debts or judgments against it. To acquire a title loan from Oak Park Financial, you must have a lien-free automobile title.

Taylor Day