A car title is a legal document that establishes an individual as the owner of the car. When you apply for financing using your car you have to use the title of your car as collateral. The laws guiding car title loans vary in states across the United States. When you apply for a car title loan, it is possible your lender holds your title or the title remains with you depending on the state laws and mode of operation of your lender.
Whether you have the title or not, you can still drive your car while you are paying off your loan, this one interesting part of car title loans. However, you have to pay off the loan before you can sell off the car.
Who keeps the Title During Financing?
Now let us answer the popular question most people ask when they https://carloansofamerica.com/refinance-auto-loan/ using their car title as collateral. Most lender keep your car title while you are still owing or paying off the loan. This is because they need to be sure that you will not sell off the car while you are still owing or paying off your loan.
What is a Car Title?
A car title is a legal document is a proof of ownership for your car. The car title contains other information about the car like the Vehicle Identification Number (VIN), the purchase date, odometer reading at the time of purchase, and whether the car is used or new.
Title Vs. Lien
Having your car title doesn’t mean you own the car free and clear. If a lien holder is listed on the title, it means your lien holder has the right to your car and can still repossess your car if you fail to pay the loan. The lien holder can also be a co-buyer or a friend or family member who once had the rights to the car. In order to remove a lien holder on your title, you will have to request the lien holder to sign a document releasing his or her rights, or have a court remove the lien holder from the title. In the case of a lender, you have to ask for a lien release document to be issued to proof that you now own the car free and clear. It is at this point that you now own the car free and clear.
Title Loans
You can only use your car to get a car title loan when you have fully paid off the loan on it. Car title loans are short term loans that are meant for people with bad credit to get emergency cash loans when they are in need. The title of your car is used to obtain the loan.
Most times when you get a car title loan, the buyer keeps your title while you are paying off the loan. As soon as you pay off the loan, your title will be released to you lien-free. Read more about vehicle titles via https://en.wikipedia.org/wiki/Vehicle_title.