You may have heard of title loans before, but do you really understand what they are? Here’s an easy to understand title loan definition and further information regarding what to consider when you explore title loans as a borrowing option:
A title loan, also sometimes referred to as car title loan, auto title loan or pink slip loan, is a cash loan where borrowers use their car title (or truck title) to secure the loan. Borrowers who take out a title loan generally must agree to surrender their vehicle title to the title loan lender for the duration of the loan, and also allow the lender to place a lien on their car.
Due to their secured nature, title loans are generally known for having high approval rates and a fast and convenient loan process.1 Therefore, they primarily appeal to borrowers who have less than perfect credit or a very urgent cash need.
If you aren’t familiar with title loans yet, now is the time to get acquainted.
What Exactly is a Title Loan?
As mentioned above, a title loan is a way to use your qualifying vehicle title as collateral to borrow money when you’re short on cash. Unlike regular auto loans, a title loan is therefore not an option you would use when looking to buy a new or used car.
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Title loans also go by many different names, so it is important to be familiar with all of them. Title loans can also be referred to as:
- Auto title loan
- Pink slip loan
- Automobile title loan
- Car equity loan
- Auto equity loan
- Cash for car title loan
- Car title loan
- Auto collateral loan
It is important that you do not confuse an auto title loan with an auto pawn loan. When you get an auto pawn loan, you usually are required to leave your vehicle at the pawn shop for the duration of your loan. In recent years however, some title pawn lenders have started to change their business practices and only hold on to the car keys or the car title during the loan.
What’s the Definition of a Title Loan Company?
Title loan companies like LoanMart are financial services providers that offer, market or service auto title loans. Depending on the state they operate in, the services they provide, and the terms of the loans such as the interest rate and any applicable loan fees, title loan companies may hold one or several licenses as title lender, installment loan company, finance lender, credit access business or similar. Regardless of their license type, what all title loan companies have in common is that they offer services that allow customers with less than perfect credit to get the cash they need by using their vehicle title as collateral.1
What Do You Need to Get an Auto Title Loan?
When you apply for most loans, the first thing many lenders will look at is your credit score. If you have poor credit you’re often times deemed unqualified right then and there. With title loans, perfect credit is usually not required since using the vehicle as collateral lowers the lending risk for the lender. Therefore, the title loan requirements are usually fairly straightforward and easy to meet.1
No matter which title lender you end up choosing, you should expect to complete a credit application with some of your personal information, provide supporting documents such as a picture ID, sign a loan contract and surrendering your vehicle title.
Now that you understand the meaning of an auto title loan and are familiar with what title loan companies are, you may be wondering if an auto title loan is right for you. If you own a paid-off or almost paid-off vehicle and are in urgent need of a cash loan, there’s no downside in seeing how much your vehicle can pre-qualify for.1
Whether you live in Arizona, Texas, or anywhere else where LoanMart provides title loan services, get started with a title loan serviced by LoanMart and see what one of the nation’s leading title loan companies can offer for you!
