The title of a vehicle can help a borrower avail a secured loan by presenting it as the collateral. The automobile is often accepted as collateral for covering the loan repayment. These are short term loans and are approved with minimum document as well as processing time. The approval of these loans is given to even the borrowers who have a bad credit history. The collateral is the title of the vehicle and not the vehicle so the borrower is free to use it during the loan term without any hassles. The borrower only has to produce documents proving beyond doubt that the vehicle belongs to him.
Approval of a conventional loan takes a lot of paperwork and a long waiting period but title loans fall into the category of exclusive loans that have the best rates and unbelievable repayment term. Since the borrower of the loan has to place the title of the vehicle as collateral, he is obliged to keep the car in proper condition during the loan term. The vehicle should have a clear title as any discrepancies would lead to the loan being cancelled.
Borrowers need to wait for many days before their loans are approved but title loans takes only half an hour for approval. The title loans are also used as the instant loans to tide over a variety of financial needs. Title loans are ideal for the borrowers who have gone through the harrowing experience of long paperwork ending in the cancellation of their loans. There are many people who do not want to get rejected after a credit check as that affects their credit scores. This is a big reason why they want to stick with the title loans which do not require any kind of credit checks.
Bad credits are not always the result of past dues of loans or non-payment of loans but can also be an impact of losing criminal or civil cases. In order to get title loans approved, the borrower needs to provide an income proof, a few references, address proofs and obviously the title loan. After presenting these documents, title loans will take only a few minutes for approval.
Since, title loans are short term loans, the APR or interest rates are much higher than the other loans. Non-payment or default in payments will lead to huge penalties which might be anything between 300 to 500 percent. Borrowers need to read the terms and conditions for the title loans very carefully before signing the deal or else they can be trapped in a huge financial crisis.