Title loan

A type of loan that requires borrowers to surrender the titles to their vehicles to lenders as collateral. Only people who own their vehicles outright with no outstanding liens are eligible for title loans. The borrower is allowed to continue driving the car while he or she repays the title loan. If the borrower misses a payment, the lender can repossess the car or truck and sell it. These loans typically carry high interest rates compared to others types of loans.