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Title Loans in canada

Title Loans Canada

Car Title Loans

Owning a vehicle is fairly common for many in Canada, and if you fall on hard times, that can be collateral when you can use fast cash for bills, repairs or something else.

While you could sell your vehicle, there’s another option. A vehicle title loan, otherwise known as a car title loan, is a type of loan that is secured by the value of the vehicle. While the lender would take ownership of the vehicle’s title, you are still able to drive the vehicle. But this only applies as long as you make your payments. If you were to default on the loan, the lender has the option to repossess what would have been your vehicle.

Why Title Loans Are a Bad Idea

When you take a title loan, the actual value estimated for your vehicle is under market value. What’s referred to as the loan-to-value ratio (LTV), which is typically 50% to 85%. But there are times that it can also be as low as 20% of the vehicle’s actual worth. Note that most receive an LTV closer to 50% of the vehicle’s value.

 

This percentage is based on what the vehicle is worth today, not what you paid for it. The lender must look at this arrangement from the perspective of; if you were to miss a payment and unable to repay the loan, then they are covered by the collateral of your vehicle, which provides them less risk of losing money as a lender. 

But here’s why car title or vehicle title loans can be a bad thing.

If your vehicle was worth a certain amount, and you put up the title for half its value and lose ownership, you’ve lost in a big way.

Before you say “it won’t happen to me” you should keep in mind that many have also said something similar and that over 20% taking car title loans default on payments. 

It’s for this reason that installment loans might be a better option for most.

Applying for an Online Loan is easy as 1-2-3

How it works?

What Does A Title Loan Cost?

The actual cost of a car or vehicle title loan will depend on the lender and province, and also depend on the term you have to pay it back. They are a high cost loan, but without a credit check since your vehicle is the collateral. 

In some cases, a lender might have hidden fees, such as having a GPS tracking device installed on your vehicle and having you to cover the costs. There can also be other hidden fees, so it’s important to carefully read over a copy of the agreement before signing so that you fully understand all terms and conditions.

Title Loan Alternatives

The alternatives often depend on the amount you’re looking to borrow, along with the terms for repayment that interest you. When you need money now it’s important to explore all your options so that you make the right choice.

If you are looking to borrow between $100 to $500, then you might look at a credit card cash advance. If this isn’t an option, and friends and family is out of the question, you might consider a payday loan. These are unsecured loans, so the interest rates tend to be higher, but you would not be putting your vehicle at risk if you were to default on payments either. The payday loan is most suited to those with really poor credit that don’t have many choices and should really be used as a last resort option. Note that a payday loan requires repayment on your next payday, so you should only borrow what you can afford to repay. Otherwise, you might find yourself with new financial issues to deal with.

If you were looking for more than $500 to borrow then an installment loan might be your best option. These are unsecured loans that are repaid over multiple payments, usually several months, and make managing your cash flow a little easier on your budget. While these also come with an interest rate or APR that might be a little higher than a title loan, at least you are not putting the ownership of your vehicle at risk.

In many cases, especially when borrowing smaller amounts, a payday loan or installment loan is often processed faster, and often provides quick cash as soon as the next day.

Who is Eligible?

Advantages of Title Loans

In some cases, a title loan can be the right choice. If you need a short term loan that is several thousand dollars and you do not qualify for this amount through an installment loan or short term personal loan, then a title loan is a consideration.

Before You Take A Title Loan

You really want to review not just what it’s going to cost, but also what it might cost if you were to default on payments. If that happened, then a title loan is one of the most expensive borrowing options you might find. 

]While you probably don’t plan to default on payments, things happen. Just like whatever unexpected expense you are looking to cover now and did not expect, which has put you in this situation where you are thinking about whether a title loan is right for you. 

In many cases, people will choose installment loans,

How To Get A Title Loan

If you really think that a car title loan is your best option and don’t mind the risk of losing your vehicle for much less than it’s worth, there are many online lenders for car title loans to be found. While interest rates might appear to be lower than installment loans or payday loans, there is a very real possibility that you might lose your vehicle for defaulting on payments. If this is the case, then this would make car title loans the most expensive option of all. 

But if you are determined to do so, make sure that you are fully aware of the following:

  • Total cost of the loan – including principal, interest, and fees
  • Payment amounts with due dates
  • Overall interest rate of the loan
  • It’s also important to know whether you have the option to pay off the loan before the end of the term, without any sort of penalty fees for early repayment.
  • Before pursuing a title loan, the lender will want to know whether you own the vehicle, whether you have paid it off (or most of it, usually 80% or more), whether you are a permanent resident, and if you carry insurance for the vehicle. You will also need to provide a driver’s license along with bank statements. 

The only true advantage of a title loan over other options is that there are some lenders of title loans that do not require you to be employed. If this is the case for you, the odds might even be higher that you will not be able to make those payments and lose your vehicle. Nothing is a sure thing, until it happens, and if you are hoping or believing that a job will happen or you will come into some money and take care of the title loan later, you’re gambling with losing your vehicle for far less than it’s worth. Depending on the make and model and year, this can mean a loss of thousands of dollars to you. 

You owe it to yourself to look into an option such as installment loans over title loans as they can often be the better option for many. 

Title loans are typically available in Ontario, Quebec, Alberta, British Columbia, and most other provinces or territories in Canada. But before you decide this is the right move for you, here’s some other details you should know beforehand when considering them.

When you take out a title loan, some of the fees you might have to pay can include; 

  • Evaluation fee – to get insight to the vehicle’s current market value
  • Search fees – to check if the vehicle has been in an accident
  • Title Search fees – to check if there is a lien on the vehicle
  • Admin & registration fees – miscellaneous fees some lenders add
  • Installation fees – if they require a GPS unit is installed to track their investment

As you can imagine, all the extra title loan fees can quickly add up to much more than you might have originally anticipated. 

But the main thing that most should be concerned with is how the loan provider or lender of title loans will undervalue your vehicle. You might say that they actually hope that you default on your payments. This will allow them to repossess your vehicle and sell it. Remember, they typically only offer half of the current market value. So in addition to anything they’ve made on fees and interest, they can also profit by selling your vehicle if you fail to make payments

Title Loans - Other Options

One other alternative to consider if you vehicle is of high value and you can use fast cash is to consider downgrading the vehicle to something cheaper and more affordable. If you have paid off a lot that was owed on the vehicle, you might even walk away with cash in your pocket. But this also depends on how much you downgrade as well.

A title loan might be a quick way to get fast cash, but more often than not, what many really need is an installment loan to help them deal with unexpected expenses, emergencies or other needs for funds when they don’t have the savings to cover their financial issues

It’s important to practice responsible borrowing and limit yourself to only take what you can afford to repay during the moment. Also, if you make repeated use of short term loans, it can be a sign of a more significant financial issue that may need to be addressed