When you need to borrow money quickly, using you car title as collateral is one way of obtaining funds. The problem is it can be a risky way to borrow money. The trouble is, if you fail to pay back the loan, you can lose your car to the lender.
The reason you can borrow money quickly without a credit check is because when you borrow money this way, you hand the title to your car over to the lender for the duration of the loan. Because they have the title, they now have collateral and a guarantee of getting their money back. Either you pay the loan off, or failing to do that, they repossess the car and sell it off to recover the money they lent you. Once you have paid the loan off, the lender will return to you the title to your car.
Start by checking with your local bank to see if they will make a loan on your car. Some banks will only make new car loans, or will finance a used car that you purchase from a dealer. What you are doing in a sense is refinancing your car.
If they do not, then you will be looking for lenders who specialize in auto collateral loans. You should know that the interest rate on this loan will be quite high. It will be very important for you to shop around for rates and to see if there are any additional fees involved in getting the loan.
The one advantage to this is that you will get the money in less than 24 hours. Since you are using your car as collateral, there is no need for the lender to go a pull your credit report or to check on your job status. By pledging the car, they have all the security they need in order to protect themselves.
Getting an auto collateral loan can help you out of a money jam, but if not used correctly, it can put your further in a financial hole.
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