A title loan is a secured loan in which the borrower uses their vehicle title as collateral. The loan amount is typically based on the value of the vehicle and the borrower’s ability to repay the loan. Title loans are high-interest loans and can be very risky for borrowers.
The most common type of title loan is a single-payment title loan. This type of loan requires the borrower to repay the entire loan amount, plus interest and fees, in one lump sum payment. Single-payment title loans are typically due within 30 days and have APRs that can exceed 300%.
If you are considering taking out a title loan, you should consider all other options first. Title loans should only be used as a last resort because they can put your vehicle at risk of being repossessed if you default on the loan. You should also be aware that defaulting on a title loan can result in damage to your credit score.