Title loan, a short-term loan, is prevalent in many American states. Though the short-term loan has several negative features, it is still a common lending choice during an emergency.
A title loan is a short-term title loan which is given against the lien-free title of a vehicle. The title of the car is kept with the lender until the borrower repays the amount with full interest. This type of loan is also called a secured loan.
(i) People with bad credit can also avail title loan.
(ii) Easy terms and conditions.
(iii) A borrower can get the cash within 30 to 60 minutes.
(iv) Use a car as security.
(v) Less paper works.
(vi) The borrower can keep riding the vehicle during the lending period.
(vi) Easy repayment options.
(vii) Loan amount up to $10, 000 or 50% of the fair market value of the vehicle.
In spite of so many benefits, the title loan facility is not legal in all over the United States. The reason is there are several loopholes in the system.
(i) High-interest rate.
(ii) The lender has the right to repossess the vehicle in case the loan in not repaid within the given time.
(iii) Payment term is very less. Usually, only one month in most of the states.
(iv) No uniform guidelines for the title lenders.