If you’re looking at short-term loan options, it’s important to be familiar with things like title loan terms before choosing which loan is best for you. The definition of a title loan is when a borrower offers an asset – in this case, their car title– as collateral for financing a short-term loan.

At Fast Auto Loans, Inc., we want to help clear up many misconceptions about title loans, as well as cover the title loan terms and details you should know before applying for one. We'll also explain other car title loan definitions you need to know, such as collateral, lien-free title, outstanding loans, and more terms to help with any confusion.

The Definitions Of 10 Important Title Loan Terms

Before you can pursue an auto title loan, it’s important to know the definitions of important car title loan terms. This doesn’t just include a car title loan definition but rather all the other terms that can affect title loans that you may not encounter during a typical day. Learn about these terms to familiarize yourself with the title loan process.

The following are the definitions of 10 important title loan terms:

1. Title Loan

The first thing it’s essential to know is the actual definition of a car title loan. A title loan is a secured emergency loan that allows you to borrow money using your lien-free car title as collateral. This emergency loan option is only available to those who have fully paid off their cars, leaving their car title clean to allow a loan lender to place a lien to process the loan.

At Fast Auto Loans, Inc., borrowers can receive between $300 and $15,000 for their Arizona title loans. How much they can receive depends on the value of their car as determined by a quick vehicle inspection.

2. Collateral

Collateral is any asset a borrower pledges as security for taking out a loan. This could be a car, home, or other possessions. The borrower offers this collateral as a “deposit” for the loan. If the borrower stops paying back the loan, the lender has the right to possess the collateral.

Requesting collateral for a loan helps to protect loan lenders if a borrower cannot pay their loan. For example, with a title loan, let’s say a man named Jim offers the car title to his Nissan Versa as collateral. The loan lender can feel safe providing him funds because they have the car title as collateral. If he stops repaying the title loan, the loan lender can seize the car to recoup the value lost by not receiving the loan money back.

Some lenders hold on to the collateral during the loan's life, but at Fast Auto Loans, Inc., we let borrowers keep and use their car as usual so long as they stick to the title loan repayment schedule.

3. Lien-Free Title

“Lien-free” is one of the most used title loan terms. Title loans require you to offer your car’s title as collateral, but to do so, you’ll need to own your car outright. This means you can’t have any outstanding liens on the car or judgments against the title.

Lien-free essentially means that you have fully paid off your car. You no longer have to make payments to the dealer who sold you the car, and there are no outstanding financial judgments that can prevent the loan lender from processing the title loan. During the title loan process, the loan lender will have to place a lien on the car title, so it’s important your vehicle title is lien-free.

4. Outstanding Loans

Outstanding loans are any debt you owe to one or more creditors for your car. This means you still owe payments on your vehicle, so the title is not yours free and clear.

Once you pay off your car in Arizona, the previous lienholder should clear the lien electronically. This means you will have a clear vehicle title that you can use to get a car title loan. The Arizona Department of Transportation (ADOT) Motor Vehicle Department (DMV) can provide more information about this process.

5. Judgments Against The Title

Judgments against property are also called judgment liens. They are court rulings that give a lender or creditor the right to possess the borrower’s asset when the borrower stops adhering to their contract – usually when they stop making payments.

A judgment can be placed on your car title when you fail to make the necessary payments. During a court ruling about your outstanding debt, the judge may see fit to put a judgment on your car title to ensure you pay off the debt you neglected. In this case, the party you owe money to will have a legal claim to your car and can seize it should you fail to pay the debt.

6. Title Transfer

To get a title loan in Arizona, the title of your car should be both lien-free and in your name. If you need to change the name on the title, you’ll have to complete a Transfer of Title. This is because loan lenders like Fast Auto Loans, Inc. don’t want borrowers to use someone else's vehicle to process a title loan without their permission.

To transfer a vehicle title in Arizona, you should first gather the essential documents, such as a bill of sale, proof of insurance, and the car title itself. You can then find a title transfer form online or at a local DMV office. Fill out the form and get the form notarized by a notary public. You can then submit the notarized form with your supporting documents to a local DMV to get the title transfer processed.

7. Bad Credit

“Credit” is a term that’s thrown around to mean your credit history, credit score, or overall ability to borrow and repay money. Generally speaking, a credit score of 600 or below is considered “bad” and can be a roadblock to many loan applications. Traditional bank loans rely on creditworthiness to determine if you can borrow money, but that is not the case with loan lenders like Fast Auto Loans, Inc.

We accept applications from those with all credit backgrounds, even if you are unemployed or do not have a checking account. You can get approved for a bad credit title loan because you are using your car title as collateral to secure the loan. Those with bad credit or no credit can still get approved for auto title loans to help pay for urgent expenses.

8. Direct Deposit

Direct deposit is probably a term you are familiar with, as many employers use it to pay their employees. For a title loan, direct deposit allows loan lenders to electronically send emergency funds to borrowers who are approved for Arizona title loans.

A loan lender like Fast Auto Loans, Inc., allows you to receive the money you need within 24 hours (sometimes, you'll even get it on the same day)! 

9. Interest Rates

Most loans, including Arizona title loans, have interest rates. The interest rate is essentially a cost of borrowing money, where the lender establishes a percentage on top of the principal you must pay. Think of the interest rate as a fee you accept when borrowing money.

The interest rate of a loan depends on what type of loan it is. Interest rates apply to title loans, with each loan lender establishing a different rate. During the title loan process with Fast Auto Loans, Inc., you can ask a loan associate what interest rates apply to your car title loan.

10. Default

Defaulting on a loan is when someone fails to make the proper payments on a loan. When you sign for a title loan with Fast Auto Loans, Inc., we will establish a payment schedule for you to adhere to. You will likely have to make monthly payments to repay the cost of your Arizona title loan.

If you consistently fail to make full payments, you can default on your loan. There are many negative consequences of defaulting on a loan, including late fees and increased interest rates. This can also lead the loan lender to repossess your vehicle whose car title you have used as collateral for the loan.

Title Loan Requirements In Arizona

Now that you’re familiar with the most important title loan terms, let’s go through the few title loan requirements you’ll need to meet. You must be 18 years old to get approved for an Arizona title loan. You will also need to be able to prove your age, identity, and ownership of a car.

At Fast Auto Loans, Inc., we also require borrowers to have the following items for verification:

• Your driver’s license or a state-issued photo ID
• A lien-free car title in your name
• Your vehicle for a quick inspection

The Title Loan Process At Fast Auto Loans, Inc.

Once you have your documents ready, complete the online loan inquiry form on our homepage to get started. A loan representative will give you a call soon after. During this call, you’ll be able to ask any questions and talk through the application process to ensure it meets your needs.

You’ll then arrange to meet with the loan rep at a convenient location. Those who get online title loans can have the loan agent come meet them at their preferred location, such as their home or office. Make sure you have the required items and meet the loan associate there.

At the meeting, they will assess your documents and vehicle and determine the loan amount you qualify for. If everything is approved, you can sign loan documents to complete the approval process. You can receive your emergency money as soon as that same day or the next business day.

Get An Arizona Title Loan With Fast Auto Loans, Inc. Today!

It’s important to know more than just the definition of a title loan before applying for one. By knowing the key title loan terms, you can decide whether this type of loan is what you’re looking for.

For those with a paid-off car in their name, an Arizona title loan may be a great way to face a financial emergency and get the emergency money you need. If you have questions or are ready to get your money now, fill out the online form today to speak with a trusted rep and start the process.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.