Auto loans or car title loans in Canada are ways to borrow money by putting up certain collateral: your car or any other vehicle you own. Essentially, you use your car as a promise that you will pay the loan back; if not, you potentially risk losing it.
As you start paying the loan back, you continue using your vehicle as you normally would. Typically, auto equity loans or car title loans in Canada are short term, ranging from three months to three years.
Banks and credit unions do not offer car title loans but you can be granted one from alternative lenders in store and online. Car title loans in Canada usually have high-interest rates and fees, making them an expensive option.
If you don’t do your research and don’t know what to expect from the lender in terms of standard practice, car title loans are also risky given that you could lose the collateral you put up.
How Does A Car Title Loan Work?
So, how do title loans work?
In Canada, car title loans are pretty intuitive. There are many companies that provide title loans and now that the world is moving online, you’re only required to fill out an application. The institution providing the loan will need certain information from you:
- A name, phone number, and residential address
- Details of your vehicle: make, model and year
- How much mileage you have covered
- Proof that you have insurance
- Employment history
The amount you ask for can vary: from $100 all the way to 75% of your vehicle’s resale value. There are certain conditions, however: your vehicle cannot have any outstanding liens or loans and until the loan is repaid, you might have to give up your title.
Before you receive a car title loan in Canada, there is information in your contract that you have a right to receive.
The institution providing the loan is required to give you:
- The complete cost of how much your loan will cost (the amount borrowed and the interest that will be incurred)
- How much and when you need to pay
- The yearly percentage rate
- The option to pay off a part or the entire loan without incurring any additional fees
- A detailed description of your vehicle
When you do get a title loan approved, as a precaution, a lender might duplicate your keys, or install a GPS and car immobilizer in your vehicle. These measures may be activated if for some reason you default, make a late payment or miss it altogether.
Car Title Loans: Pros and Cons
Car title loans in Canada have many advantages.
- They’re Quick. Approval can take as little as minutes because there is no thorough background check required and checking a vehicle is relatively easy.
- They’re Easy. Because of the fact that no background check is required, getting approved is a relatively straightforward process. Plus in any one city, there are multiple lenders who can provide you with the service.
- No Credit Checks or Down Payments. You don’t need to put a down payment because your car acts as a substitute for monetary resources. Any credit score you may currently have is irrelevant.
- Interest Rates Are Low. Since your car replaces any money you might usually have to put down, you are in line to receive interest rates lower than the going average. Keep in mind however, you do still run the risk of having your car taken from you.
There are disadvantages that you should remember because a false step or a lack of information can prove costly in more ways than one.
Particular legislation has reduced the severity and frequency of the disadvantages. Rocketing interest rates are being curtailed because of regulations placed on the amount of interest a company can charge.
To protect you as a customer, there are also laws in place that regulate the maximum amount you can take from one loan and how many you can take out within a given year. The setbacks usually surface when an individual does not understand the terms put forward in the contract or does not pay in time because of an unrealistic amount borrowed.
You can avoid these disadvantages by the following procedure and ensuring you understand the ins and outs of what you’re getting into. The first thing you need to do is read the contract diligently. Know the consequences and follow up by paying off the loan efficiently and responsible. Do not use a stopgap measure as a way to finance your future. The end result could be the loss of your vehicle and worse still, a large pile of debt.
Do not consider car title loans as a persistent means to get quick cash. They should only be used as a last resort because, at the end of the day, they are not sustainable. A car title loan is only useful if you find yourself in an emergency. It’s a one-time thing for a very particular situation. Make sure you consider your options, read the contract carefully and make your payments consistently and on time.
Car Title Loan Providers
Car equity loans in Canada are granted very often. As such, there are a lot of providers out there. Chances are, if you do a quick search on car title loans near me, you’ll get a decent range of options. Here is a list of the most trusted, reputable loan providers in the country.
Serving the Canadian Auto Finance Industry since March 2009, Easy Title Loans are amongst the few that offer car title loans online in Canada. It’s easy, efficient and the interest rates on offer are low.
Mr. Good Loans offer same day title loans: no limits, no credit checks and no delays. They offer short and long term loans, with flexible terms in the form of FlexTerm Loans that allow you to pay off your loan anytime without penalty.
Equity Loans Canada also operate on a same day cash system. They obtain information as quickly as possible with an online application form and have photos sent as attachments to allow timely loan process that gets you an appointment the same day you apply.
Since 2004 Snap Car Cash Loans has been helping thousands of customers with their short term financial needs. They offer up to 70% lower interest than competition, the longest long terms, flexible payment options, same day cash and no job requirements.
Car Title Loans Canada
Car Title Loans Canada has been catering thousands of customers since 2004. They strive to loan the maximum amount your car allows, provide fast funding, building trust, create a comfortable business environment and keep information private and confidential.
Can’t Pay Back a Car Title Loan in Time: What Now?
If you miss a payment or can’t pay back your auto loan by the due date:
- You may be charged a fee by the lender.
- If you have insufficient funds in your account, the credit union or bank from might ask you to pay a non-sufficient funds (NSF) fee.
- If you cannot pay and decide to extend the period of the loan, you may enter more liability and have to pay more fees.
- If you default, miss a payment or pay late, your credit score will suffer.
- As discussed earlier, the lender may activate immobility or GPS.
- Your car may be seized.
- Once seized, you will be required to pay the costs associated with a seizure.
How To Apply For A Car Title Loan?
If you are considering applying for a car loan in Canada keep in mind that applications can be submitted online or in person.
To Be Eligible:
- You need Canadian citizenship or permanent residency status.
- You have to legally qualify as an adult.
- You need documentation proving a stable income.
- You have to have complete ownership of your car.
How to Apply:
- Go in person to a company or online through their website.
- Provide basic information such your name, date of birth and contact information: address and email address.
- Give a valid form of identification (state or national).
- Provide information concerning past employment.
- Get your vehicle inspected and appraised.
In Canada, once you apply for car title loans online, you will need to take your vehicle to the lender’s location so that they can evaluate it physically, usually within the next couple of days.
Keep in mind that car loans in Canada vary depending on province and lender. Some lenders may not need employment history or may not even do a background check.
What Details Do I Have To Provide To Get An Auto Title Loan?
To get car loans in Canada, The lender may ask you for:
- Proof that you own your car.
- Proof that you’ve paid off your car or owe a small amount on it.
- Proof of permanent residency.
- Proof of insurance.
- Your driver’s license.
- A bank statement.
- An inspection of your car.
Again, car loans in Canada vary depending on province and lender. Some lenders may not need employment history or may not even do a background check.
Car title loans in Canada are a great way to get a quick influx of cash. But that’s all they should be.
You should never consider these options as foolproof, sustainable or something to fall back on. Plan ahead, budget accordingly and make sure you have exhausted all other options before you term to auto loans. Also, make sure to always read the fine print, know your rights and what is the standard that can be expected from you.