A title loan provides cash to a borrower, who gives the lender the title to his vehicle in exchange for the money, Consumer.gov explains. Title loans are very costly due to high interest rates and other additional fees.Continue Reading
To apply for a title loan, the borrower must submit a form of identification, complete the application process, surrender the title of his vehicle to the lender and show the vehicle to the lender. The lender may request an extra copy of car keys and ask the borrower to purchase a roadside service plan. Anyone looking to borrow money from a title loan should only borrow as much money as he can pay back successfully by the due date, Consumer.gov advises.
If the borrower is not able to replay the title loan, the lender has the right to take the vehicle, Consumer.gov notes. Title loans generally have to be repaid within 30 days. If the borrower is unable to repay the loan by the due date, he may have the option to borrow the money for an additional 30 days. This is called rolling over. When a lender repossesses the vehicle, the lender is allowed to sell the vehicle and keep the profits.Learn more about Personal Loans