Title loan: Difference between revisions

{{short description|Secured loan using borrower's vehicle title as collateral}}

A '''title loan''' (also known as a '''car title loan''') is a type of secured [[loan]] where [[Borrower|borrowers]] can use their [[vehicle title]] as [[collateral (finance)|collateral]].<ref>{{cite web|url=http://www.iowa.gov/government/ag/consumer_advisories/auto/car_title.html |title=Avoid Car Title Loans |date=December 2005 |publisher=[[Iowa Department of Justice]] |accessdate=November 28, 2012 |url-status=dead |archiveurl=https://web.archive.org/web/20121226211652/http://www.iowa.gov:80/government/ag/consumer_advisories/auto/car_title.html |archivedate=December 26, 2012 }}</ref> Borrowers who get title loans must allow a lender to place a [[lien]] on their car title, and temporarily surrender the hard copy of their vehicle title, in exchange for a loan amount.<ref>{{cite news|url=https://www.wsj.com/articles/SB10001424052748704746804575367250783943906|title=States to Protect Borrowers Who Turn to Cars for Cash|date=July 2010|work=[[The Wall Street Journal]]|accessdate=November 28, 2012}}</ref> When the loan is repaid, the lien is removed and the car title is returned to its owner. If the borrower defaults on their payments then the lender is liable to repossess the vehicle and sell it to repay the borrowers’ outstanding debt.