Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 24, 2012

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Car title loans are a great way to get cash quickly. By using the equity built up in your vehicle, you can qualify for an auto title loan even if you have bad credit or a low paying job. As a result, this method of borrowing money is one of the easiest, quickest, and most efficient ways to secure physical cash.

[loansform]For those with poor credit scores, car title loans are a great way to secure money. Most people prefer this type of financing to other short-term forms of borrowing since the fees tend to be much lower. This is particularly true when comparing auto title loans to payday loans.

While payday loans may carry annual percentage rates (APRs) upwards of 390 percent, car title lenders often keep their APRs below three-digits. That translates directly into cheaper financing for borrowers.

What’s more is that money secured by automobiles is usually given for longer periods of time than other cash advance options. That means that borrowers have a longer time to repay their money.

Financing money using a car title isn’t without risks though. This type of borrowing is what’s known as a “secure” type of financing. That’s because lenders give their money based on the value of a borrower’s collateral or security. In the event a borrower defaults, the lender will reclaim their money by liquidating the borrower’s collateral. In the case of auto title loans, that collateral is the borrower’s vehicle.

It is precisely due to that reason that borrowers should only finance money based on their car title if they know they will be able to repay the loan.

But since car title loans are secured by a vehicle, the higher value a borrower’s car is worth, the more money they will qualify for.