To get a loan one must have good credit history because bank and other financial institutions evaluate the worthiness of a loan applicant based on his/her credit history. In banks and financial institutions loans are considered as a risk that they take and earn through the interest the borrower pays. So to minimize the risk factor banks and other reputed financial institutions does a thorough financial background check of the borrower to know whether he/she is capable enough to repay the loan amount or whether he/she is a defaulter in the past.

This is the reason people with bad credit score or who are defaulters seldom get entertained by banks and reputed financial institutions. The direct meaning of this is that people with bad credit score in no ways can get a loan approved by these institutions. So is this the end of the road for people with bad credit history? Well, certainly not because there are still many mediums present that work parallel with the main stream banking institutions and even consider people with credit score eligible for a loan. The best example of this is car title loans where even if a person has a bad credit record or he/she is a defaulter in the past is sanctioned a loan. You would be thinking how it is possible to sanction loan to a defaulter because the lender is putting his money at risk by approving the loan amount.

Well the  lender is not a daredevil who likes to gamble with his money but the secret lies in the way a car title loans Los Angeles is approved and the factors that are looked upon prior sanctioning a loan. So let’s find out why bad credit score is not given the hype in car title loans:

Loan is Given on the Value of Car: Car title loans are given on the value of the car so there is no need to look at the credit history of the loan applicant. The loan is based on the value of the car and the amount that a lender approves is also based on the value of the vehicle of the borrower.

Car Title is Held as Collateral: The lender keeps the title of the car as collateral and this is mentioned in the contract. So there is no risk a lender takes because in return of the loan amount he is keeping the title of the car as collateral.

Lenders has the authority to sale the car: If the borrower doesn’t pay premium on time the lender has full authority to put the vehicle on sale and recover the money sanctioned to the borrower. So there is no risk involved as the lender can very easily recover his loan amount by selling the car.

Loan is given less than the actual value of the car: Like every other financial institution the car title loans Los Angeles doesn’t give full loan amount based on the value of the car as many factors like depreciation, time, maintenance etc. are taken into account. This means the lender is in no way at risk because even if he sells the vehicle one year after he can very easily recover the actual loan amount he had sanctioned to the borrower.