Title Loan
Title Loan: A title loan is a type of secured loan where borrowers can use their vehicle title as Collateral to obtain quick cash. The loan amount is typically based on the value of the vehicle. Borrowers retain possession of the vehicle but must provide the lender with the vehicle title until the loan is repaid. If the borrower fails to repay the loan, the lender has the right to repossess the vehicle.
Examples:
- A borrower with a car valued at $10,000 may take out a title loan for $5,000, using the car’s title as Collateral.
- A motorcycle owner may secure a title loan of $3,000 against their bike to cover emergency expenses.
Cases:
- Case 1: A borrower takes a title loan for $1,500 with a repayment term of 30 days. If they fail to repay, the lender repossesses the vehicle.
- Case 2: A borrower pays off their title loan on time and retrieves their vehicle title, having paid interest and fees associated with the loan.