Car title loans are similar to payday loans in quite a few ways. Online payday loans became popular over the past decade and while it took a while it seems that car title loans are now nearly as prevalent online. Much like a payday loan, car title loans typically come with high interest rates. Car title loans offer you quick cash — often between 100 CAD and 10,000 CAD — in exchange for your vehicle’s title as collateral. They’re a type of secured loan, one backed by property the lender can take if you don’t pay.
Typically personal loans in Canada aren’t all that big. However, one way to get around that is to secure your loan against your vehicle, trailer, RV, boat or other assets. It’s also a great way to acquire a loan if you have a poor credit rating.
A car title loan works much in the same way as a regular installment loan. The difference is that the loan itself is secured against your vehicle. The lender takes title on your vehicle to secure himself against the potential risk of you defaulting on your loan.
If you have a low credit score then a car title loan is probably the easiest way to obtain a loan. Your weak financial profile is offset by the fact that the loan is secured, and as such, your application will appear far less risky to the lending officer who is reviewing your file.
A private loan works just like a bank loan. Similar to any regular loan from a bank, a private loan is a loan from a private institution or individual. It is a loan from a private lender as opposed to one of Canada’s chartered financial institutions.
Loans are easily doable if you have a good credit score and a down payment, but if you are missing one of the two it is not the end of the world. Loans Canada has a track record of success in finding loans for individuals in situations like these.
Standard car title lenders:
– Don’t check for credit.
– Don’t have to require proof of financial income.
– Need the car to be owned outright.
– Can ask that borrowers leave a key or install a GPS tracker or a remote immobilizer — all of which make cars easier to find again.
– Can repossess and sell the car, then charge the borrower fees for the repossession and storage. If the car sells for more than what’s owed, some states don’t ask the lender to repay the borrower the leftover.
While their interest rates are lower than those of payday loans, which can have APRs upward of 1,000%, car title loans’ interest rates are by no means low. Thirty-six percent APR is generally considered the upper range of “affordable.” The fees and cyclical borrowing associated with Car title loans make them even more expensive. Since payday loans and auto title loans are advertised as viable loans you must realize these are high cost.