Before You Borrow, Learn These Title Loan Terms
Knowledge is the key to navigating your financial success in the future, and that’s especially true when it comes to borrowing. Here are the title loan terms you should understand before you borrow money.
The definition of a title loan is a type of loan secured by the value of your car title, giving you access to a lump sum of money you can use as you need. Some other important terms you should know include collateral, lien-free, identifying information, and eligibility.
Each of these terms is important in its own right, but understanding title loan terms isn’t particularly complicated. Read on to discover the definition of a title loan and important title loan terms you should understand.
What Is A Title Loan?
Before discussing the terms associated with a title loan, it’s important to refresh your understanding of how title loans operate. Vehicle title loans are secured loans that use your car’s title as security for the loan.
You can borrow up to $2,500 when taking out a title loan, and the amount you qualify for will be dependent on the condition of your vehicle, among other factors that affect your eligibility.
Title Loan Terms To Know
1. Collateral
One important term that distinguishes title loans from other types of loans is that it is secured by collateral. Collateral is an asset that you put on the table to demonstrate your willingness to repay the loan.
When you take out a title loan, the lender will put a lien on your vehicle, giving them the legal right to repossess it in the event of nonpayment.
Doing so is not a malicious act; it’s intended to build trust between you, the borrower, and the lender. Because the loan is secured, direct lenders are more comfortable issuing larger borrow amounts and longer repayment periods (depending on the lender, of course). While the loan is being repaid, you can still drive your car as normal.
2. Lien-Free
Another important term to understand in the world of loans is lien-free. It’s important that you have a lien-free or clear car title; otherwise, your lender won’t be able to work with you.
A lien on your title is a judgment or debt against your car title that gives a third-party legal claim to it. In this instance, your title no longer works as collateral for the loan. Remove any lien from your title before you apply for a title loan.
3. Identifying Information
It’s important that you understand what’s expected of you when you apply for a title loan. Your direct lender will need to verify your identity by law, which requires you to have some form of identifying information. You can use the following to meet this requirement:
- Driver’s license
- Non-driver’s license
- Student ID
- Passport
- Military ID
4. Eligibility
Eligibility is an important factor in determining whether you qualify and how much you qualify for.
The condition of your vehicle heavily influences what you can take out on your car title. Older, poorly maintained cars will not secure you as much cash, while newer, well-kept cars will put you towards the higher end of the spectrum.
Of course, you should only borrow what you need, but it’s good to have a heads-up on what you can expect to be eligible for based on the condition of your vehicle.
The Simple Process To Apply With Mississippi Title Loans, Inc.
Applying for a title loan is extremely straightforward. First, make sure you have these three essential requirements:
- Driver’s license or state-issued ID
- Lien-free car title
- Your car itself for a quick inspection
All set? Now you can start with the application process:
- Fill out the form provided on the website to send your information to the nearest store location.
- Wait for a call back from a representative, who will go over the loan process, what you may qualify for, and what you’ll need.
- Schedule a meeting either at the store or a location you choose with the representative so they can inspect your required items.
- Bring along your important items to the meeting, and the representative will review your documents, car, and VIN to determine if you qualify.
- If approved, you can get access to the quick cash you need on the same day or on the following business day.
Complete The Online Form Today!
As a first-time borrower, there are numerous title loan terms that can make getting the money you need feel daunting, but the truth is that the definition of a title loan and its associated terms are extremely simple to understand. If you need emergency cash, then Mississippi Title Loans, Inc. has the resource you need to get started.
Simply fill out the online form, and you’re well on your way to completing the application process for a title loan!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.