Title Loans Explained: The Definition Of Title Loan And 10 Other Terms

Are you facing unexpected expenses like medical bills or urgent car repairs? Title loans may help. They offer a quick way to access emergency cash using your paid-off vehicle.

In this guide from Utah Title Loans, Inc., we will explain the definition of title loans, as well as other essential terms you should know. Learn how title loans work below!

Title Loans Explained: Everything You Need To Know

A title loan is a short-term loan that provides quick cash in an emergency and uses your vehicle title as collateral. You can use your lien-free car title to secure the loan. You can get approved for title loans if you have fully paid off your vehicle. You can obtain a Utah title loan if you own a car, truck, or van that is fully paid off and registered in your name.

Contrary to popular belief, you don’t have to give up your car to get a title loan. Even while you borrow up to $15,000, you’ll still keep driving your vehicle. Additionally, perfect credit isn’t necessary to qualify. Instead, you can apply for a title loan even with bad or non-existent credit.

Approval for title loans only requires a few items, including:

• A state-issued photo ID that displays your full name and age
• A lien-free car title in your name
• Your vehicle for a quick inspection

Along with the definition of a title loan, there are several important terms you should understand when considering a loan. Discover more about key title loan terms below.

1. Lien-Free Vehicle Title

A vehicle title is a legal certificate that establishes the legal owner of a car. A lien-free car title just means that you own your car outright and there are no outstanding judgments or loans against it.

If you own your car outright and fully pay off any auto loans, you likely have a lien-free vehicle title. You need this to get a title loan. If you have outstanding liens, debts, or judgments, you must pay them off before getting a Utah title loan.

2. Collateral

Collateral is defined as anything pledged as security for repayment of a loan. It secures the loan provider with a high-value item that can replace money they did not receive from the borrower.

For title loans, borrowers use their lien-free vehicle title as collateral. If the borrower fails to repay the loan, the loan lender can seize the borrower's vehicle because they have the vehicle title. Once a borrower repays the loan, they can get their vehicle title back without any penalties.

3. Secured Loan

A secured loan is a loan that uses collateral. The lender requires collateral to secure the loan, which allows borrowers to receive higher loan amounts. This protects the lender in case the borrower cannot afford repayment.

Car title loans are secured loans that use your vehicle title as collateral.

4. Credit Score

A credit score is a number that sums up your financial health. It considers how you handle your credit accounts, including how often you make payments on time, how many accounts you have open, and the mix of your credit accounts.

The following are the factors that influence your credit score:

• Payment history
• Credit utilization ratio
• Length of credit history
• Credit mix
• How much new credit do you have

Your credit score can influence the value of your Utah title loan. A borrower with worse credit will likely get approved for less money. Your credit score can influence whether a lender has faith that you can repay the loan.

5. Soft-Credit Check

A soft credit check is a type of credit inquiry where the lender will see your score without notifying the three major credit bureaus. These credit checks, done with title loans, are just to assess your credit situation and will not reduce your credit score.

This differs from hard credit inquiries done by traditional banks, which will lower your credit score.

At Utah Title Loans, Inc., we will do a soft credit check to assess your credit score. However, that does not mean you will get rejected with poor credit. Your credit score does not influence loan approval, just the value of your title loan.

6. Defaulting

Defaulting on a loan occurs when you do not meet the terms specified in the loan agreement. Typically, this refers to a borrower failing to repay the loan by the due date. Borrowers who miss payments and do not discuss a repayment plan for their loan with the lender may default on their loan.

If you default on a title loan, your car may be seized. The lender will take the vehicle because you failed to make your agreed-upon payments. Understanding this before securing a title loan is crucial to avoid accumulating debt you cannot repay. Only borrow what you can afford to make the title loan repayment manageable.

7. Principal

The principal loan amount is how much you owe before interest or other fees accumulate. It is the base value of a loan that you must repay.

For example, you borrowed $3,000 with a title loan. $3,000 is the principal amount you are required to repay. You may also accumulate interest the longer it takes you to repay your loan on top of the principal.

8. Online Inquiry Form

The online inquiry form is where you provide information that the loan officer needs to begin the process. You can find our inquiry form on our website’s homepage, where you can provide your essential details. This helps you jumpstart the process of getting approved for title loans.

Here is what you need to provide on an online inquiry form for a title loan:

• Your full name
• Zip code
• Email address
• Phone number
• Vehicle make, model, and age

9. Vehicle Inspection

We will inspect your vehicle during the car title loan approval process to determine its value. Your car’s value will contribute to how much you can borrow with a title loan. The more your car is worth, the more you could borrow.

The following are the factors that we will look for during our vehicle inspections:

• Make and model
• Vehicle age
• Condition
• Mileage
• Maintenance history

10. Loan Amortization

Loan amortization means your payments cover both the interest and principal. A longer loan term may lower monthly payments but increase the total interest paid over time. Lenders use loan amortization to calculate how much of your payment will go toward the principal and how much will be put toward interest.

Ask your loan representative about how your payments break down. Understanding amortization helps you see how much goes toward interest and how much toward your loan balance. This can help you determine how long repayment will take and the impact of interest on your repayment price.

Title Loan FAQs

How long does title loan approval take?

You can get approved for a title loan the same day you apply by completing the process in person at a Utah store location. The online form takes less than five minutes, and you can complete the process at one of our Utah store locations in less than 30 minutes.

How much can you borrow with a title loan?

The maximum amount you can borrow is $15,000. However, not all borrowers will get approved for this amount. Your title loan value depends on your car’s value, determined during the in-person meeting.

Can you get a title loan with someone else’s vehicle title?

You must own the vehicle and have the title in your name to apply for a title loan. If your car is in someone else’s name, you must get a title transfer before applying.

Get A Utah Title Loan Today – Borrow Up To $15,000 In Emergency Cash

Ready to get fast financial relief? Apply for a title loan at Utah Title Loans, Inc. You can get approved the same day you apply, regardless of your credit score. We allow borrowers to start online and get approved in person in less than 30 minutes.

Fill out our online form, and hear soon from a loan representative to walk you through the process. Stop waiting—visit your nearest Utah store today and leave with emergency cash in under 30 minutes.

 

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.