<P> In the Canada, a car title loan, is a type of secured loan where borrowers can use their vehicle title as collateral . Borrowers who get title loans must allow a lender to place a lien on their car title, and temporarily surrender the hard copy of their vehicle title, in exchange for a loan amount . When the loan is repaid, the lien is removed and the car title is returned to its owner . If the borrower defaults on their payments then the lender is liable to repossess the vehicle and sell it to repay the borrowers' outstanding debt . </P> <P> These loans are typically short - term, and tend to carry higher interest rates than other sources of credit . Lenders typically do not check the credit history of borrowers for these loans and only consider the value and condition of the vehicle that is being used to secure it . Despite the secured nature of the loan, lenders argue that the comparatively high rates of interest that they charge are necessary . As evidence for this, they point to the increased risk of default on a type of loan that is used almost exclusively by borrowers who are already experiencing financial difficulties . </P>

What is a title loan on a car