A car title loan or simply a title loan is a high interest loan where the borrower uses their automobile as collateral for the loan.
These high risk sub-prime loans are considered riskier for consumers than payday loans because the borrower puts their car at risk to secure the loan. In many cases they have to leave their car with the lending institution in order to receive the loan funds. As in all high risk lending, title loans can help a person in dire need in some circumstances. In many other cases the person would be better off to sell their car instead of taking out a loan.
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