Rob's old car stopped working and he urgently had to buy a new one. The only problem was that he didn't have the entire amount to make his purchase. He was falling short by $2,000. Then, Rob heard about title loans in California, which would allow his new car to pay for itself. To find out how this is possible, read on.

What is a title loan?
In a title loan, you use a vehicle you own as collateral. You literally hand over the title of your vehicle to the lender and he provides a loan in return. Title loans in California can be granted for a vehicle you already own or for one you are intending to purchase.

How does a title loan help me?
Title loans are the ultimate in convenient financing. The only requirement to qualify for a title loan is a vehicle with the proper ownership papers. This means you are eligible for a loan even if you have bad credit history. A second advantage of title loans in California is their short-term nature. The average loan period ranges from 15 days to 3 months.

At the end of the loan period, you simply make a balloon payment, which includes the initial loan amount, interest due, and loan fees. This payment system saves you the hassle of complicated interest calculations and keeping track of monthly payments.

What do I need to know while applying for a loan?
Like all loans, there is an element of caution involved in applying for a title loan. Ensure your lender is licensed to practice in the state of California. Another factor to consider is the interest rate. Because title loans in California are given for short periods and do not rely on the credit history of the borrower, they are classified as high-risk loans. Thus, a title loan has a higher rate of interest than a traditional bank loan.

Alisha Delphi holds a degree in Economics and Commerce from USC. She started out as a financial advisor with a bank and has moved on to become a loan consultant with more than ten years of experience. Her key areas are auto title loans, auto pawn and fast cash loans.