With a title loan, a borrower gives a lender the title to his vehicle in exchange for a small amount of money for a short period of time. Title loans are often some of the most-expensive loan options, because of the additional fees and high interest rates.
If a borrower is unable to repay the title loan, the lender can take the vehicle. Usually, title loans have to be paid back within 30 days. If a borrower isn't able to repay the loan in full by the due date, borrowing the money for an additional 30 days may be an option. This is known as a "rollover" or "rolling over." Whenever a lender repossesses a vehicle, they are allowed to sell it and keep the profits.
In order to apply for a title loan, a borrower has to submit a form of identification, complete an application, surrender the title to the vehicle, and show the lender the vehicle. Lenders may request an extra copy of the car keys and require the borrower to purchase a roadside service plan.
It's best that individuals only borrow as much money as they can successfully pay back by the loan due date. Other options available to borrowers include loans from credit unions, banks and friends.