Learn These Title Loan Terms Before You Borrow
Many lenders try to scam borrowers with shady agreements and unclear processes. Southwest Title Loans doesn’t work that way. We value our customer’s trust and are very transparent. We go out of our way to help you understand the title loan terms and explain the definition of a title loan.
We want you to make an informed decision about your loan. We know this is a big financial decision, and we’re here to guide you through the process. When we give you the loan package, we ensure that you know the terms, and answer all your questions.
During your application, a loan representative will assist you through every step. But just in case you need an additional reference, this article lays out the definition of a title loan and the most important title loan terms.
The Title Loan Terminology You Should Know
There are two kinds of loans: unsecured and secured loans. Unsecured loans are approved based on credit history. Your reputation as a borrower, based on your payment history, amount of debt, and types of loans you have taken out help validate that you are “credit worthy”.
Secured loans are loans that are approved based on security or collateral. You can apply for secured loans even if you have a low credit score or have not been able to establish a good credit history.
The definition of a title loan is that it’s a secured loan where you use your vehicle title as security. You don’t have to go through an extensive credit check or need to meet a credit score, but you use your car to back up the loan.
Collateral is any property that is pledged as security for a personal loan. It can be a house, boat, vehicle, stock, jewelry, or anything of value.
One of the biggest misconceptions about the definition of a title loan is that the car will be physically confiscated until the end of the loan. This idea comes from pawnshops, which hold the collateral (like jewelry or watches).
However, title loan terms of agreement work differently. The lender does not get the vehicle but places a lien on the vehicle title. While taking advantage of a vehicle title loan, you can still enjoy full use of your car, as long as you honor the payment agreement.
This is one of the most important aspects in the definition of a title loan, and what most people have questions about.
A lien is a legal right over any property. It can be applied by a lender if the property is used as collateral for a loan, or applied by the government, business, or individual who has interests or legal claims on it.
For example, a lien may be placed by a contractor who has not been paid, or by the government for unpaid taxes. The court may also place a lien if a property is under dispute.
To get a loan, you must have a “lien-free vehicle title”. Essentially, this means that the car is not being used as collateral for any other loan and is not involved in any judicial dispute.
If the loan is approved, as part of the title loan terms of the agreement, a lien is placed on the vehicle title during the duration of the loan and is lifted when the loan is fully paid.
A vehicle inspection checks the car’s overall condition to determine the loan amount you qualify for. The loan representative will check the interiors and exteriors for signs of damage and wear and tear, mileage, and whether the car needs any repairs.
This process is done at your nearest Southwest Title Loans branch. It typically only takes 30 minutes, so you don’t have to wait very long.
After the vehicle inspection, the loan representative will determine the loan limit or the highest amount you can borrow. You may decide to avail yourself of the whole amount or borrow only what you need.
This is the legal contract that explains the amount you will borrow, interest rate, when the loan is due, late charges, and other important title loan terms.
The loan representative will go through this document with you and explain everything. If you need more clarification on the definition of title loan or the terms of your agreement, feel free to ask.
Ready To Get A Title Loan Now?
Southwest Title Loans is a trusted and reliable provider of title loans. If you need to raise emergency cash and are considering getting a title loan, fill out the online form. We’ll quickly call you back and help you with your application.
You can also contact us if you need any clarification about the definition of a title loan, title loan terms, and whether it is the right loan for you.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.