Do I Give Up My Car With Car Title Loans?
Many people are interested in exploring alternative loan and financing options in order to get quick cash when they need it. This is especially true of people who do not have access to credit cards and who do not have the credit scores necessary to qualify for traditional bank loans. One option considered in these situations is a car title loan; however, some people are fearful that they will need to give up their car when they take a car title loan. The reality is that you do not have to give up your vehicle when you take a car title loan as long as you are able to make your payments as agreed.
Understanding Car Title Loans
When you take a car title loan, your lender will take the title to your car. This is a piece of paper that signifies your ownership of the vehicle and you must bring this with you when you are interested in applying for a car title loan. Your lender will hold on to your title as the “lienholder” for as long as there is an outstanding balance on the loan. This may be any period of time that you and the lender agree upon as being appropriate. While car title loans are generally not meant to be a source of long-term financing, sometimes people will take a car title loan for as long as 5 years if they might need that amount of time to get their finances on track and to repay the money they borrow. For the duration of this time, you will not have access to the title of your vehicle and you will not be able to borrow more money against it in most cases. You can sell your vehicle, but the proceeds must go first to payoff the title loan so that you can get the title to the buyer.
However, although the lender will keep the title of your vehicle as long as you have an outstanding loan balance, you keep your vehicle to drive and the lender does not take possession of the vehicle during the duration of the loan, except in the case of your failure to make the payments as agreed. Just like when you have any loan that is secured by collateral, the lender may take the collateral if you default. But as long as you make your payments as agreed, then taking a car title loan is a great way to quickly and easily tap into your vehicle’s equity while you continue to enjoy its use.