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Originally Posted On: https://fastaction.ca/2023/01/25/understanding-car-title-loans-a-comprehensive-guide/
One of the most common forms of collateral in Canada is vehicles. The average car value of a Canadian car is CAD 45,000. If you require a quick loan, car title loans may be your best option.
A title loan works differently than a car loan. So what is a car title, and how can someone leverage their vehicle for a loan? Read on to learn more through this comprehensive overview.
What Is a Car Title Loan?
A car title loan is a unique type of short-term loan. The borrower pledges their vehicle as a form of collateral. This may be referred to as an auto title loan as well.
The loans are generally limited to relatively new vehicles. Depending on the value of your car, you can access a loan for anywhere from a few thousand dollars to several thousand or more.
As a short-term loan, the borrower is expected to pay back the amount of the loan relatively quickly. At that time, the lien against the car will be lifted, and full ownership of the vehicle will be restored.
Reasons You May Need Car Title Loans
Qualifying for a traditional loan can be burdensome. There are many supporting documents borrowers have to file and an often lengthy application process. Many people seek car title loans because obtaining a loan is significantly easier.
Emergencies happen in life that require cash. Whether it be an unexpected hospital bill, delinquent payment to a creditor, or other unexpected events, borrowers can use their vehicle to access immediate credit to pay back whatever is needed.
Maybe you are between jobs and require a short-term loan. One of the benefits of a car title loan is that you do not have to be employed to qualify. What matters to a car title lender is the value of your car and whether you own that vehicle.
How the Loan Process Works
At Fast Action Finance, we streamline the application process so you can quickly get the loan. Our application takes about 15 minutes to finish. Borrowers usually have access to money within about an hour.
Some applicants don’t even have to walk into one of our Ontario offices because the process can be completed online. We recommend having certain documents ready ahead of time. Everyday things our team will request include a driver’s license, standard forms of ID, proof of vehicle ownership, and pictures of your car, among other requirements.
The car photos should include images of every side of the car, VIN, and odometer. Be sure to include the license plate in one of the photos.
The lender will then check the information to see if it matches up. Smartphone photos work fine, so you don’t have to worry about having professional photographs.
Once one of our lenders verifies everything, you’ll be given the loan and a repayment plan. Remember, timely payments are important to ensure that you only repay the agreed-upon amount.
Frequently Asked Questions
Now that we’ve covered some of the basics of car title loans, let’s explore some frequently asked questions. Our customers frequently ask questions about repayments, loan ownership, bad credit scores, and more.
How Are Repayments Handled?
Once one of our lenders verifies everything, the lender will give you the loan and a repayment plan. Keep up with your repayment plan so you can pay off the loan on time.
Can I Get a Loan If the Vehicle Is in Someone Else’s Name?
You do not have the legal right to seek a car title loan on a vehicle that isn’t yours. This is true even if you frequently use the car for personal or professional reasons.
In certain circumstances, you can ask the owner to co-sign your loan. This gives the lender permission to use the vehicle as collateral.
The process follows as if you used your car for the loan. You will be responsible for paying back the loan. The co-signer may become involved if the borrower goes into serious default.
Can I Use My Car After It Is Used as Collateral?
Absolutely. You are free to continue using your vehicle as you would normally. The lender has no benefit from taking away your ability to drive and work. You keep the keys and the loaned money.
Does Bad Credit Affect My Ability to Get a Car Title Loan?
One of the benefits of a car title loan in Canada is that you can access credit with or without a good credit score on your record. Some borrowers do not even need proof of employment.
Your car is a basic form of collateral. Your ability to repay the loan according to the scheduled agreement matters more than your job status.
Is There a Borrowing Limit?
Yes. The amount of your loan depends on several factors. The main element is the value of your car at the time of the loan.
The typical percentage that is borrowed is 50%. So for a vehicle valued at $20,000, this would mean a loan as high as $10,000.
Unsure what your car or truck is worth? Check out the Canadian Black Book for an estimate.
Learn More About Car Title Loans
Life will hit you with unexpected expenses that cannot wait. The team at Fast Action Finance is here to provide you with personalized loans that help you get your life back on track.
Contact us online today to start the application process so you can enjoy the benefits of prompt car title loans.