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Car title loans

Need fast cash? Secure a loan by taking one out against the title of your car.

Name Product Loan Interest Rate Max. Loan Amount Loan Term Min. Credit Score Requirements
Loans Canada Vehicle Title Loan
Loans Canada Vehicle Title Loan
0% to 29.99%
$35,000
3 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
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Car title loans are loans taken out against the title of your car. These loans give you access to credit, which can typically be as much as 50% of the value of your car. Provided you can repay the loan within a few weeks, an auto title loan could be an option you might consider if you’re facing difficult financial times.

Our guide below explains how an auto title loan works, the features and eligibility criteria you’ll need to consider when you apply, and the pros and cons.

How do car title loans work?

Auto title loans, also referred to as title pawns, are loans secured to the title of your vehicle. This means that you can still drive your car while you’re repaying the loan, however your car is used to secure the loan. Unlike an unsecured loan, if you don’t make regular payments on your auto title loan, your vehicle can be repossessed and sold. You will generally have a few weeks to months or even years to repay back your auto title loan, depending on the provider.

Lenders that provide auto title loans usually require that you own your vehicle outright. If you’re leasing your car or still making payments on it, you may have a harder time finding a lender who is willing to work with you.

After you apply, you may have to take your vehicle to a physical location to get it appraised. You’ll usually be offered 25-50% of the value of the car in loans, and you’ll have to start making payments based on a schedule that can be found in your loan contract.

What rate can I expect on a car title loan?

Interest on a title loan can be as high as 60% per year. However, lenders can’t charge more than this by law and that includes all fees and other costs to get the loan. The actual rate you get typically depends more on your loan amount, your term, the value of your vehicle and where you live, rather than solely on your personal credit rating. All of these can influence your rate.

Title loan APRs vs. interest rates

The interest rate actually isn’t the most important number to consider when weighing the cost of a title loan. Instead, you’ll want to look at its APR — or annual percentage rate.

The APR is how much you’d pay in interest and fees over one year, expressed as a percentage. Looking at the APR rather than the interest rate makes it easier to compare loan offers of similar amounts and terms. APRs for title loans can often be in the triple digits.

Additional title loan costs to consider

Title loan providers might charge other fees associated with taking out and repaying the loan, including:

  • Vehicle evaluation fee. This determines the value of you car.
  • Title search fee. A title search verifies that there aren’t any liens on your car.
  • Search fee. Shows if your car has been in any accidents.
  • Administration fees. The lender charges this to setup your account.
  • Roll-over fee. This is charged if you extend your loan term.
  • Registration fee. The lender charges this to put a lien on your car.
  • Installation fee. If applicable, this is charged to install a GPS tracker on your car.

Not all lenders advertise rates and fees online, especially if they aren’t legally required to do so. You might have to call ahead or visit a storefront in person to learn the costs you can expect.

How rates work on single-payment vs. installment title loans

Title loans fall into two main types: single-payment and installment.

How they’re different

You repay single-payment title loans all at once, usually within 30 days. They often come with a flat fee that’s expressed as an amount per $100 borrowed.

Installment title loans are repaid over a specified term of 3 months to 3 years. They tend to come with both interest and fees and often have lower APRs than single-payment title loans.

How the type affects the cost

An installment title loan with a low APR could end up being more expensive than a single-payment title loan, because there’s more time for interest to add up.

Let’s take a look at how a $1,000 single-payment title loan and installment title loan with a 4-month term comparison.

Single-payment title loanInstallment title loan
APR700%300%
Interest and fees$583$694
Total cost$1,583$1,694
Cost per month$1,583$423

As you can see, the installment title loan actually costs more overall. However, it’s more affordable in the short term, lowering the chance that you’ll have to roll over or refinance your loan.

The cost of rolling over a title loan

Rolling over a title loan — also called renewing or refinancing — involves taking out a new loan to give you extra time to pay it off. It’s common with single-payment title loans. Each time you renew, you pay the same rates and fees that came with the original loan. Some provinces ban or limit how many times you can roll over your loan, so it’s good to know what the rules are where you live.

Is a title loan right for me?

A title loan might be a high-cost financing option, but it can benefit specific situations, like:

  • When you need money fast. Title loans can get you funds in as little as 30 minutes. The only other type of loan with that kind of turnaround is a payday loan, which tends to come in smaller amounts but with higher APRs.
  • When you have poor credit. Title loan providers typically accept all credit types. Some might not even check your credit when you apply — though you might want to think twice about no-credit-check loans.
  • When you need a larger short-term loan. Title loans can sometimes run as high as $50,000, depending on the value of your vehicle and where you live.

What are car title loan requirements?

Car title loan requirements vary by lender. However, you’ll likely need to meet some of the following criteria to qualify:

  • Steady income. While you might not necessarily need to be employed, most lenders require you to show that you have money coming in regularly.
  • Clear title in your name. The title must be in your name and can’t be used as collateral on another loan.
  • Age of majority. You need to be the age of majority in your province or territory.
  • Residency. Some lenders might require you to prove you’re a resident of the province or territory where you’re taking out the loan.
  • Insurance. You’ll need to provide proof of insurance for your vehicle.
  • No bankruptcy. You might have trouble qualifying with some title loan providers if you’ve filed for bankruptcy in the past few years.

What documents do I need for a title loan?

To make sure you meet all requirements, lenders typically ask for documents to verify your application. The documents required to get a title loan can vary between lenders. Typically, you have to provide the following:

  • Your car title. You must bring your car title with you when you apply for a title loan to prove that you are the owner of the car. Online lenders might require you to send it in the mail.
  • Proof of income. Lenders often ask to see recent pay stubs, bank statements, receipts from benefits or any other evidence that you can afford to pay back your loan.
  • Government-issued ID. A government-issued photo ID like a driver’s license or passport helps lenders verify your identity.
  • Proof or residency. Lenders might ask for a recent utility bill, mortgage or lease agreement, or any other proof that your address is current.
  • Vehicle inspection. Lenders may ask for a vehicle inspection certificate to make sure your vehicle is in derivable condition.
  • Proof of insurance. If you’re required to have insurance to get a title loan, you might need to bring your auto insurance card with you.
How to compare car title loans

Consider these factors when you’re comparing auto title loans:

  • Interest rate and fees. The interest rate can have a big impact on the overall cost of the loan you take out. Even a small difference in percentage can result in you paying hundreds of dollars more for your borrowed money. Be on the lookout for hidden fees which can drive up the cost of your loan.
  • Loan amount. The amount you can borrow will likely depend on how much your car is appraised for and the maximum loan amount set by the lender. Generally, you can borrow 25-50% of the value of your vehicle, with the value being determined after an appraisal.
  • Loan term. Loan terms will differ between providers, but can last anywhere from weeks to a couple of years.
  • Payment flexibility. Find out if a lender lets you make payments that match your paycheque schedule from your job. This might be weekly, bi-weekly or monthly. This means you can immediately pay off your loan and budget your income and expenses more easily.
  • Making extra payments. Some lenders charge penalties or fees if you decide to make additional payments or if you decide to repay the loan ahead of time. If you can repay a loan before it’s due without incurring any additional costs, you can end up saving a lot of money in interest payments.

Benefits and drawbacks to consider

Pros

  • Receive your funds quickly. If you apply in person at a physical location, you can generally receive your approved funds almost as soon as you accept the loan’s contract. With online applications, lenders can transfer funds into your bank account by the next business day.
  • Bad credit is OK. Since you’re providing collateral in the form of your vehicle’s title, you don’t have to have a good credit score. Lenders will be willing to lend to you because of the secure nature of the auto title loan.
  • Better rates. Auto title loans tend to offer lower interest rates when compared to other unconventional forms of credit like payday loans and installment loans.

Cons

  • Possibility of losing your car. If you aren’t able to pay back your initial loan plus the interest it accrues, the lender has the right to take possession of your vehicle. This could leave you in a much worse financial situation than you were in to begin with, so make sure you know what you are getting into before you sign the loan contract.
  • High cost. While these loans typically come with lower interest rates than payday loans, they are still costly when compared to standard loans. Consider whether you can afford the repayments before taking out a loan.
  • Disreputable lenders. Not all lenders are equally reputable and trustworthy. Compare different lenders in order to find the lowest interest rate. If you wind up choosing a dishonest lender and end up paying incredibly high interest rates, it can put you at risk of losing your car.

Consider a payday loan as an unsecured short-term loan option

Things to avoid

  • Taking on a loan you can’t afford. If you think you may have trouble paying off a loan in a timely manner, you may want to avoid taking it. If you don’t keep up your payments, you could generate more fees, damage your credit and possibly lose your vehicle, putting you in a worse situation than you were in before.
  • Refinancing. If you can’t pay off your loan in the original term set out in your contract, the lender may allow you to refinance or roll over your loan. You’ll be charged additional fees and interest on top of your existing fees.
  • Skimming over the loan offer document. Make sure you go through the terms and conditions of your loan carefully. This should give you a clear indication of how much the loan will end up costing you. If you don’t agree to the terms, you’re under no obligation to accept the loan.

Watch out for lenders with few requirements

Loans that sound too good to be true often are. If a title loan provider advertises how easy it is to qualify for a loan, it could be a sign of a predatory lender — especially if it “guarantees” approval. Most reputable lenders make an effort to check that you’re able repay the loan by looking at your income or credit. Minimal requirements could be a sign of:

  • High rates. Lenders that don’t check your credit or income often assume the worst and can charge higher rates than others.
  • Unnecessary add-ons. Others might use it as an excuse to include products you don’t need like extra insurance to inflate the price of your loan without increasing the APR.
  • Bait-and-switch schemes. Providers that advertise title loans with low requirements might also be a tactic to sell you another loan with less favorable rates and terms.

Generally, you’re better off working with a lender that has more requirements, even if you have poor credit or low income.

8 telltale signs of a predatory lender

How to apply for a vehicle title loan

Applications can be submitted online or in person.

Eligibility criteria:

  • Be a Canadian citizen or permanent resident
  • Be at least 18 years old, or the age of majority in your province or territory
  • Have proof of a steady income
  • Own your car outright, however some lenders may approve you for a loan if your car is almost paid off

Steps to apply:

  • Go online or in person to a lender
  • Provide your name, date of birth, address and email address
  • Produce a valid form of ID
  • Give details about your employment status and income
  • Have your vehicle appraised

If you apply online, your vehicle will likely be evaluated in person at one of the lender’s physical locations, usually by the next business day.

Title loan alternatives that are easy to qualify for

Don’t think you can qualify for a title loan? You might want to look into these alternatives instead:

  • Payday loans. If you just need a few hundred dollars or less as soon as possible, a payday loan might be able to help. You don’t need good credit to qualify, though APRs can easily top 700%.
  • Installment loans. You might want to consider installment loans if you need to borrow between $2,000 and $10,000 and have poor credit. These tend to be more expensive than title loans, though you don’t risk losing your car.
  • Payday alternative loans (PALs). Don’t want to take out a short-term loan? Check out these payday loan alternatives.
  • Local resources. Are you often resorting to short-term loans to make ends meet? You might qualify for a government program to help with basic living expenses.

Frequently asked questions about car title loans

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