Pros and cons of car title loans in Canada
Auto title loans can provide quick access to cash for individuals who own a vehicle. However, they come with both advantages and disadvantages.
- Pros:
- continued vehicle use
- flexibility in loan amount based on the value of your car
- quick access to cash
- soft credit check because of the collateral
- Cons:
- high interest rates compared to classic loans
- hidden fees, so carefully review the loan agreement
- regulatory variability depending on the province
- risk of auto repossession if you fail to repay the loan
- potential for a debt cycle because of the high loan expenses
How do I apply for a car collateral loan in Canada?
- Research the market: banks, credit unions, and online lenders.
- Check their eligibility criteria, including the age and condition of your car, your credit history, and your ability to repay the loan.
- Gather required documents such as your identification, proof of income, vehicle registration, and insurance information.
- Assess your vehicle's value: apply for online tools or get a professional appraisal to estimate your vehicle's worth.
- Complete the application form provided by the chosen lender. You may need to do this online or in person, depending on its processing policy.
- Wait for approval, while your application and supporting documents are checked.
- Get the appraisal of your car used as collateral for the loan: some financial companies may require a physical inspection or appraisal of your car to determine its value.
- Receive the loan offer and review its conditions: interest rate, amount, repayment terms, and any associated fees.
- Sign the agreement, this legally binds you to the terms and conditions outlined by the lender.
- Receive funds in the form of a cheque, direct deposit, or another agreed-upon method.
- Repay the loan on time.
As an alternative, you can also take out a personal loan. Your possible expenses:
Personal loan calculations for 1 year (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 20,000 | 7.50% | 813 |
| 20,000 | 10.50% | 1,138 |
| 20,000 | 13.50% | 1,463 |
| 50,000 | 7.70% | 2,085 |
| 50,000 | 10.70% | 2,898 |
| 50,000 | 13.70% | 3,710 |
| 100,000 | 7.90% | 4,279 |
| 100,000 | 10.90% | 5,904 |
| 100,000 | 13.90% | 7,529 |
| 200,000 | 8.10% | 8,775 |
| 200,000 | 11.10% | 12,025 |
| 200,000 | 14.10% | 15,275 |
Car equity loan alternatives in Canada
If you're considering alternatives to car title loans in Canada, several options may offer more favorable terms and lower costs.
- Other security bank loans often have lower interest rates compared to car title loans.
- Credit union loans have more community-focused lending and may offer lower interest rates than banks.
- Personal Installment Loans can have longer repayment terms and lower interest rates compared to car title loans.
- P2P platforms potentially offer more flexible terms and lower interest rates.
- High-limit credit cards may be a more affordable option than car title loans.
See the similar FAQ about Canadian banks:
- B2B Bank SMART Loan
- B2B Bank investment loan
- B2B bank RRSP loan
- CIBC collections contact
- CIBC loan and financial calculators
Details of companies offering the financial services:
BHM Financial Group
Head office’s address: 1090 Avenue Pratt 1090 Avenue Pratt, Outremont, Montreal, QC
Contact center: 877-787-1682
Web-site: https://www.bhmfinancial.com
Car Title Loans Canada
Head office’s address: 4-2880 Queen Street East
Contact center: 1-877-804-2742
Web-site: https://www.cartitleloanscanada.ca/
FastAction Finance
Contact center: 1-877-346-2274
Web-site: https://fastaction.ca
LendforAll
Web-site: https://lendforall.ca
Title Loans online
Contact center: 1-800-455-3997
Web-site: https://www.titleloansonline.ca
uLoan
Head office’s address: 212 – 2900 Pandosy St Kelowna BC, V1Y 1V9, Canada
Phone: 250-300-3015
Web-site: https://uloancanada.com/