Collateral Loan

If you’re in need of funds to cover an expense, like a car repair or home improvement project, a collateral loan might be a good option. This type of loan requires collateral, which is something valuable you own like a house or a car. Let’s take a closer look at what a collateral loan is and how you may benefit from one.

What is a collateral loan?

A collateral loan is secured to collateral or an asset that you own. Since collateral reduces a lender’s risk, a collateral loan is easier to qualify for than an unsecured loan, which doesn’t require collateral. A collateral loan may also come with a lower interest rate and more favorable terms. But keep in mind that if you default on a collateral loan, the lender can take possession of it and use the sale proceeds to repay the loan.

How collateral loans work

When you apply for a collateral loan, the lender will ask you for details about the collateral you plan to offer up. They’ll also look at its fair market value to determine how much the collateral is worth. This information will give them an idea of how much money to lend you and what type of terms to offer. Some common types of collateral loans include:

  • Title loans: Title loans are secured loans that let you use your car title as collateral. With these loans, the lender will typically offer you a loan amount worth 25 to 50% of your vehicle’s value.
  • Mortgages: Mortgages are home loans that are backed by the home you’re financing. If you default on your mortgage, the lender can foreclose on your property and sell it to recoup their losses.
  • Home equity loans: Also known as second mortgages, home equity loans are tied to your home’s equity, which is the difference between the current value of your home and the amount you still owe on your mortgage.
  • Vehicle loans: Vehicle loans are collateral loans you can use to purchase a vehicle. These loans are secured to the car, truck, boat, or motorcycle you bought. If you fail to pay back the loan, the lender has the right to repossess your vehicle.

Where can I get a collateral loan?

Fortunately, collateral loans like title loans, mortgages, home equity loans, and vehicle loans are common and offered by various lenders. You can find them at banks, credit unions, and online lenders.

Pros and cons of collateral loans

As with any financial product, collateral loans come with benefits and drawbacks, including:

Pro: Good credit not needed

Since collateral loans reduce a lender’s risk, you can get approved with fair or poor credit. As long as you have collateral and feel confident you’ll be able to repay your loan, a collateral loan is worth considering.

Pro: Lower interest rates

Compared to unsecured loans, which don’t require collateral, collateral loans usually come with lower interest rates. This can save you hundreds or even thousands of dollars over the life of your loan.

Pro: Potential to receive a larger loan amount

If you need to cover a significant expense, a collateral loan can provide you with a larger amount of funds. Lenders know they’ll be able to seize your collateral if you default, so they may be willing to lend you more money.

Con: You may not qualify if you don’t own the collateral

Collateral, like your house or car, is required for collateral loans. If you don’t own something of value, a collateral loan won’t be an option and you may need to choose an unsecured loan instead.

Con: You could lose your collateral

With a collateral loan, the lender has the right to take your asset if you default. That’s why you should only take one out if you know you’ll be able to make all your payments.

How to get a collateral loan from Advance America

To apply for a title loan from Advance America, follow these simple steps.

  1. Fill out an application: If you own a vehicle, you can apply for a title loan online within minutes, from the comfort of your own home.
  2. Visit an Advance America location: Once you submit your application, you can bring your vehicle to a nearby Advance America location to get it appraised.
  3. Wait for a loan offer: Once Advance America appraises your vehicle, they’ll offer you a loan amount. This amount will be based on the value of your vehicle.
  4. Receive your funds: If approved for a title loan, you may receive your funds the same day you apply. You can continue driving your car as you pay back this collateral loan.

Benefits of collateral loans from Advance America

Here are a few perks Advance America title loans offer:

Easy application

You can fill out a quick and straightforward application online from the comfort of home. All you have to do is share some basic personal information and details about your vehicle, like its year, make, model, trim, and mileage.

Quick approval

As soon as your application has been reviewed and your paperwork has been finalized, you’ll likely get approved quickly and receive the loan the same day you apply or within 24 hours. You won’t have to wait weeks or months for the funds.

Keep driving your car as you repay the loan

You’ll be able to keep driving your vehicle as you pay back your loan. There’s no need to invest in a rental car or find an alternative form of transportation.

Get a collateral loan from Advance America

Advance America title loans are a great way to get the funds you need fast. You can fill out an application online or at an Advance America store location near you. If approved for a title loan, you can get the cash you need right away and drive your car as you pay back the loan. Learn more about our title loans by visiting Advance America today.

The Advance America advantage

Since 1997, Advance America has helped millions of hardworking people with a variety of financial solutions including Payday Loans, Online Loans, Installment Loans, Title Loans and Personal Lines of Credit.
148+ million
loans issued
1,100+ stores
and online loans
24+ years
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