Sometimes the easiest things in life is confusing as heck right? I know that before I started working in the title loan industry I actually couldn’t wrap my head around what is a title loan. It took a while to REALLY understand such a simple financial solution because what is a title loan to me is not what a title loan is to people who work in the industry. So with a stab at my own stupidity, I will tell you what I thought and see if you actually feel the same.
I heard about title loans when the banking industry basically polluted the housing market with bad loans. Back then, if you recall, loan modifications was all the rage and for good reason. It was the public’s way to “stick it to the man” for sticking it to them. What a neat idea really. You take out a home loan which you know the terms and the situation and then someone decides that the bank was a crook because people should not have even taken out the money and they left the door wide open to do it so it suddenly becomes the BANKS fault and people got to redo their loans and not pay for a long time. That is sweet. I rarely see a situation that allows the person who really should have known better to dump their woes on the big bad bank bullies AND GET AWAY WITH IT! Awesome.
So it stands to reason that the word “title” in my head meant the title to a house. I’m not stupid but I never heard of such a thing and this made the most sense to me. Still I could not answer the question “What is a title loan!”
The next place my head went was a loan on some insurance thing. Like something to do with escrow or something. That this was some sort of process to do with real estate. But then again I didn’t know much about buying a home so this made sense to me.
I just don’t know why I could not wrap my head around the thought that a title loan had to do with CARS! So someone literally had to tell me that I was close in my thought but not the right asset. This is how it was explained to me that FINALLY made sense…
Some fortunate people have purchased high priced things in their life.. homes, cars, boats, RV’s and the such. Some of those people have actually paid off the loan on the valuable thing and now they have something that still, to this day, has value. Because of this, they can use it as security against a loan. The trick is how much is it REALLY worth because just because I saw it is worth something does not mean someone would buy it for that price right now. Once a fair market determination is made, then I know my TRUE Value of the asset. From there, some lenders will give me a loan against that car. If I screw up and fail to pay the loan… guess what… I lose the car but of course I have NO PLANS on doing that!!!
So… What is a title loan? It’s a loan against something you have a piece of paper that says it has value and you are willing to allow it to be put at risk if they put at risk money. Simple as that.