1/16/2014 by D. Cammarota
What is a Title Pawn?
Although many consumers think that a title pawn or an auto pawn is the same as a title loan, they are actually two different types of short-term cash loans. With a title loan, borrowers simply leave their free and clear car title with a title lender and drive away in their own car. The lender generally files a lien with the state so that the loan is secured and so that the car cannot be changed into someone else's name during the course of the loan.
A car pawn, on the other hand, works in generally the same way that any other pawn transaction works - the car is left with the title pawn dealer and is returned once the loan is repaid. The auto pawn dealer still must file a lien against the car (since unlike most pawned items it is a titled object) and again, the lien is lifted once the auto pawn loan is repaid.
Both title loans and title pawns have their pros and cons and so it is important to do as much research as you can before making a decision. For example, a title loan can be riskier because if you do not pay the title loan back in the allotted time frame, you can lose your vehicle with no recourse. With a title pawn, however, you can continue to make payments and extend the auto pawn loan until such time that you are ready to pay it back in full. Of course, with a car pawn loan, you lose the ability to use your car while the loan is being repaid, but if you can live without it, it is better than losing your vehicle altogether. Additionally, in some states, title loans are prohibited and so a car title pawn may be your only option.
Both title pawns and title loans are good options for getting fast cash in a pinch, but if you rely on your vehicle to get back and forth to work or to transport your family, it is important to fully understand the terms and conditions before signing on the dotted line. There is plenty of information on car pawns or car loans on the internet and be sure to read as many consumer reviews as possible. Or, you can visit your local auto pawn dealer and expect that he or she be fully cooperative and patient with helping you understand the loan. If you feel uncomfortable or rushed in any way, then it's probably best to keep on driving.