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Tips for Negotiating a Car Collateral Loan Using a Title

83% of Canadians own or lease a vehicle, but it sits unused for 95% of the year. If you own a vehicle, you can use the car as collateral for a loan.

A car collateral loan can get you emergency cash quickly. You don’t need good credit. You may not require proof of employment.

Learn more about loans using a car as collateral and see whether it’s the best option for you.

What Is a Car Collateral Loan?

A car collateral loan is also known as a car title loan or vehicle title loan. As these names suggest, you use your car or another vehicle as collateral to secure a short-term loan. Vehicles other than a car to use as collateral include:

• Trucks
• Vans
• Recreational vehicles
• Trailers

You keep the use of your vehicle during the term of the loan.

A car collateral loan can help when you need cash quickly. Title loans are an alternative to traditional loans. They don’t require a high credit score, background check, or lengthy application process.

Eligibility for a Car Collateral Loan

You must be over 18 years old to qualify for a car title loan in Canada. You can use your vehicle as collateral for a loan if it’s paid off and in your name. The lender will verify that you don’t have any current liens on your car.

If the vehicle is registered in someone else’s name, you may still be able to get a car title loan. The person whose name is on the registration can co-sign the loan.

The co-signer should understand their responsibilities. Typically, however, they won’t need to get involved.

How to Get a Car Title Loan

The process for getting a car title loan is straightforward. With most lenders, you can start the process online. You’ll need documents such as:

• Personal identification, like a driver’s license or passport
• Vehicle title
• Vehicle details, including the make, model, year, and odometer reading
• Proof of car insurance

Some lenders will ask for financial details like proof of income or employment. You may also need an official vehicle appraisal to verify its value.

After you have all the necessary documents, you can complete the loan application. The application may take as little as 15 minutes to complete. Then, wait for approval.

In most cases, you can receive your money less than an hour after completing the application process.

Negotiating a Car Collateral Loan

Understanding the terms of your car title loan is very important. It helps you avoid problems during repayment.

The lender must provide at least the following information in your loan contract:

• Total cost of the loan, including interest and fees
• Amount and timing of payments
• Annual percentage rate
• Option to pay before the loan due date without penalties
• Description of your car

Comparing lenders helps you be sure you’re getting the best terms. Once you find a lender, you can try to negotiate.

Two vital elements of your car title loan are the loan term and the interest rate. Getting the most favorable terms will help you make payments on time and repay the loan on schedule.

Loan Term

Loans using a car as collateral are short-term loans. The term ranges between 3 months and 3 years. A shorter loan term is less expensive overall. Your monthly payments will be higher, though.

If your financial situation only allows a smaller monthly payment, you could benefit from negotiating a longer loan term. The total amount you’ll repay will be higher. It could be worth it if it helps ensure you’ll be able to make all of the monthly payments, though.

It can also be a good idea if you would be able to make payments for a while and pay off the rest of the loan early.

Interest Rate

Car collateral loans usually have lower interest rates than other forms of quick cash, like payday loans. The lender has your car as collateral, which provides more assurance of repayment. Canadian law caps the interest rate for car title loans at 60%.

You can try to negotiate a more favorable rate with your lender. Even a percentage point or two can make a significant difference over time. You’ll be in a better negotiating position if your car is in good condition with a higher resale value.

How Much Can I Borrow With a Car Title Loan?

You can typically borrow up to half of the appraised value of your vehicle. Canadian lenders usually use the Canadian Black Book to judge your car’s value.

Your lender may be able to appraise your car using the photographs you provide. Ensure the photos are clear and give the best possible representation of your vehicle.

Some lenders will ask you to bring your vehicle to their location for an in-person appraisal.

Remember that paying back a smaller loan will be easier. No matter what loan amount your car’s value will provide, only borrow what you need.

Finding a Car Collateral Loan in Ontario

A car collateral loan can help you with emergency cash. You don’t need a credit check. You can have your money in less than a day.

Negotiating the loan term that works best for you and a lower interest rate will help you repay the loan.

Fast Action Finance can help you get the money you need. We’ve been serving Ontario since 1997. We have the highest approval rate in the industry.

You can count on our experience and excellent customer service. Learn more about our car title loans and apply today.