I dug into this a bit, and it turns out to be not quite the same as a title loan.
It's basically a refinancing of an existing auto loan. People with mortgages often refinance to obtain better terms, lower payments, or a better interest rate. Some also refinance to take cash out from the equity in the property. The idea is to get car owners to do the same. There's nothing inherently wrong with it, except that whereas real estate is a mostly appreciating asset in the long term, the value of a car that's being driven around is almost certain to depreciate.
The requirements, from the bank's perspective, are the same as for an auto loan. The borrower must maintain insurance on the vehicle, and the bank is the primary beneficiary of the insurance if the vehicle is totaled or stolen. They reserve the right to repossess the car if payments are not made, or to call the loan if the insurance lapses.
From the bank's perspective, the only risk would be if something happened to the vehicle that dramatically reduced its value, but that was not covered by the insurance for whatever reason.
