Jul 25, 2013 Sean Albert
Car title loans can sometimes be a useful of way for consumers to obtain short term lending services. The activity is one that has been increasing in recent years as individuals and financial providers explore alternative ways to extend credit.
One state that has seen an increase in auto title lending in the last several years is Virginia. The Richmond Times-Dispatch recently reported that the number of auto title loans spiked across the state in 2012. The source noted that the number of such loans jumped to 161,500 last year from 128,500 in 2011 to reach a value of $180 million. In 2011, the value of the state's auto title industry was just $125 million. Also, the number of lenders increased from 378 to 395.
According to the source, some critics of the lending practice have been outspoken about the growth, but others have defended the activity. Many loan providers see the service as a viable alternative to traditional banks that have established more stringent regulations in the wake of the Great Recession. As a result, many consumers and small business owners are unable to fund capital investments or major purchases. Many lenders believe it shows just how useful short term products can be for their customers.
One of the benefits of auto title loans is that it provides the consumer with quick access to funding. CarsDirect noted that such loan applications are usually processed in one or two days and don't require a credit or background check. Also, it's little risk to the lender because the loan is backed by the vehicle. However, the car owner gets to keep the car while the loan is outstanding, which is a major benefit to individuals that need to commute to work on a daily basis.