Compare car title loans

What is a title loan?

A title loan is a secured loan that uses your car’s title as collateral. Usually, you repay the loan plus a fee in one lump sum. You can get your cash in as little as 30 minutes and lenders have few requirements besides having a car title.

But title loans are one of the most expensive loans out there, charging fees equivalent to a 300% APR or higher. They also come with the risk of losing your car and getting caught in a cycle of debt. For this reason, title loans are illegal in some states.

How to get a title loan

Six steps take you through the process from start to finish.

1. Compare lenders. Look at features like APRs, how much you can borrow, where it’s located and eligibility requirements to find a lender that’s right for you.
2. Fill out the application. Typically, you’ll need your car’s make, model and mileage, as well as your contact information and details on anyone else on your car title. You can often complete this step online.
3. Bring your vehicle for inspection. Lenders like to check your vehicle to make sure it’s up to standards. Some also install a GPS tracker to help them locate it if you default.
4. Submit your documents. Title loan providers generally ask for documents to verify your income, residence and identity.
5. Sign your loan documents. Read the terms and conditions before signing off on your loan.
6. Collect your funds. You’ll typically get your money in cash within 30 minutes of arriving at the store.

How borrowing with a shared title works

Only the person with a name on the title can take out a title loan. If your name is on the title, then you apply for an auto title loan. If you’re using a car that has a title in someone else’s name, you won’t be able to borrow anything against it, even if you’re the main driver.

How much do title loans give?

You may typically borrow between 25% and 50% of the vehicle’s value, according to the FTC. Most lenders offer between $100 to $5,500, depending on your car’s condition and where you live.

When inspecting your car, lenders consider factors like its year, make, model, mileage and general wear and tear. Your income and current debts can also affect how much you can borrow.

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The Consumer Financial Protection Bureau (CFPB) no longer requires lenders to consider your ability to repay a loan. This could put you at risk ofgetting caught in a cycle of debt. Carefully review your finances and the loan cost to make sure it fits your budget.

Before you take out a short-term loan

Payday loans, installment loans and auto title loans come with high rates and fees which can trap you in a cycle of debt. Borrowers may find themselves taking out a second or third loan because they couldn’t pay back the first one on time.

Consider alternativesbefore opting for a short-term loan:

• Local resources. Government agencies, nonprofits and local charities often offer free financial services and help with food, utilities and rent for those in need.
• Payment extensions. Talk with your bill providers about a longer payment plan or extension on your due date if you’re behind on payments.

How much does a title loan cost?

Most title loans come with a flat fee of around of 25% of the loan amount, according to the FTC. If you extend the loan, most lenders charge a similar fee per extension. Installment loans often come with interest rates similar to fees the single-pay lenders charge.

Suppose you get $500 in cash for your car title. If you pay it back within 30 days, your lender might charge you a $125 fee, which works out to a 300% APR.

But if you extend it for another 30 months, you’d owe a fee of $250, which is equivalent to a 600% APR. If you extend it more than three times, you’ll owe more in fees than what you originally borrowed.

What rate can I expect on a car title loan?

It’s typical for interest on a title loan to top 100%. But with title loans and other types of short-term loans, the rate you get typically depends more on your loan amount, your term and where you live, rather than solely on your personal credit rating. All three can influence your rate.

State limits on title loan interest rates

Some states and cities enforce caps on how much a lender can charge for a title loan, which might affect your interest rate.

For example, California caps interest rates at 3% a month, which translates to 36% in interest annually. Arizona caps interest rates at 10% to 17% monthly, depending on how much you borrow. That’s roughly to 121% to 206% in annual interest.

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.

The typical APR on a title loan is around 300%, according to the Federal Trade Commission.

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 in a lump sum, 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 three months to three 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

Alow-APR installment title loan could end up costing morethan a single-payment title loan, because there’s more time for interest to add up.

Let’s compare a $1,000 single-payment title loan and a installment title loan with a four-month term.

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

Additional title loan costs to consider

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

• Lien filing fees. Your lender might ask you to cover the cost of putting a lien on your vehicle’s title.
• Late payment fees. If you’re late on a payment, you could face a fee equal to 5% of the payment due, though it varies by lender.
• Nonsufficient funds fees. Many lenders charge a fee if your check or bank transfer bounces. These canceled check or returned payment fees are often the same amount as the late payment fee.
• Collection fees. If you fail to repay your loan and your car is repossessed, your lender might charge a fee for the cost of collecting your vehicle. This fee is typically added to your loan balance and covered when it resells 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.

Title loan terms

Single-pay loans — the most common type of car title loan — have a term of 30 days, though it can be short as 15 days in some cases. Some lenders also offer installment title loans, which break up your repayments over a term of around 12 months. But these are much less common than the single-pay option.

Some lenders allow you to extend a single-pay loan, though how often varies by state. Many states limit how often you can extend a title loan and some ban it outright. That’s because extending a loan even once doubles the cost of your title loan and makes it even harder to pay it back.

How boat title loans differ

While boat title loans and auto title loans work similarly, you’ll find a few key differences:

• Larger amounts are available if your boat or yacht has a higher resale value than your car. But it’s often difficult to find a boat title loan of under $1,000.
• Longer terms tend to come with larger amounts. Some boat title loans offer with terms of up to 42 months, while auto title loans tend to max out at 36 months.
• It takes longer to get your boat inspected than driving your car to the lender or inspection center — especially if your boat is moored far away from your house.
• It’s less of a risk than losing your main means of transportation.

Truck loans are also slightly different

Truck title loans work a lot like any other type of title loan: You take out a short-term loan using your truck’s title as collateral. This means you can continue to drive your truck while you’re paying it off.

You can typically borrow between $100 and $50,000, depending on your vehicle’s resale value. Truck loans can be larger than your typical car title loan, so you may have longer to pay it back than other title loans, sometimes up to three years.

Semitruck title loans

While you could get a loan secured by your pickup from any car title loan company, not all offer loans backed by titles for semis or other commercial trucks. If you’re looking for financing secured by a commercial vehicle, you might want to look into lenders that specialize in this. Some also allow you to back your loan with other heavy equipment.

Where to get a title loan

The most common way to get a title loan is in person at a store. While you might be able to apply online, in most cases you still have to bring in your car and title for inspection. This can be a good thing — it’s harder for a brick-and-mortar lender to break the law than an online lender.

In the rare case that you can find a title loan entirely online, you’ll likely need to submit more documents. And it can take at least one business day to get the loan.

Required documents

Generally, you must be able to provide the following documents to get a title loan.

• Your car’s title. You can’t use your title as collateral for another loan. If someone else’s name is on the title, they usually must apply with you as a coapplicant.
• Your car. Your lender won’t keep your car, but it will need to inspect it first.
• Proof of income. Some lenders require you be employed, while others accept borrowers on welfare or with a pension.
• State-issued ID. This helps your lender verify your identity and age.
• Proof of residence. You might have to provide a utility bill or copy of your lease or mortgage.
• Bank account information. Not all title lenders require you to have a bank account, but some might.

Can I get a title loan without a clear title?

No, you must have a clear title to get a car title loan. This means that you can’t be using it as collateral for another loan — including your original auto loan. If you don’t have a clear title, consider auto equity loans instead.

Is a car title loan a good idea?

Title loans are expensive and best left for emergencies — if they’re even legal in your state. They might be one of the few options available to you if you’re unbanked, have recently filed for bankruptcy or have bad credit.

But if you don’t pay it back, the lender could repossess your vehicle and you could be at risk of getting trapped in a cycle of debt. Leave a vehicle title loan as an absolute last resort.

The title loan cycle of debt

A recent Consumer Financial Protection Bureau (CFPB) survey found that people who take out a single-payment title loan are at high risk of starting a cycle of debt.

Compare auto title loans

Alternatives

Title loans are intended for when all other options are exhausted. And even then, they might not be right for you. Instead, here are some other options:

• Local resources. Most states have programs that will cover some of your food, medical or home costs. You won’t have to pay back any money you receive. But it can take a while to get approved.
• Friends or family. Your circle could possibly help it you’re tight on cash. For higher confidence, make your loan legally binding by drawing up a contract. The downside is you risk ruining your relationships if you can’t repay.
• Payday alternative loans (PALs). Some federal credit unions offer PALs from $200 to $1,000 with APRs capped at 28%. They’re much more affordable than a title loan, but you likely won’t be able to get your money as fast.
• Community development financial institution (CDFI) loans. These nonprofit lenders are typically local banks or credit unions that offer affordable short-term loans to nearby residents. But like payday alternative loans, CDFI loans can take longer to fund.
• Credit card cash advances. If you have an emergency expense and a credit card, taking out a cash advance is often less expensive than a title loan. It’s still not cheap, though: You have to pay a fee and start paying interest right away.
• Installment loans. This short-term loan works doesn’t require collateral and gives you up to 18 months to pay off the funds It still has a high APR and can be even more expensive than a payday loan in the long run.
• Payday loans. Similar to a single-payment title loan, a payday loan can get you cash the same day you apply, but without collateral. But rates can be upwards of 700%, and you often can’t borrow more than $500 at a time.

What happens if I don’t pay back a title loan?

It depends on your location. If you live in a state that regulates title loans, you might expect your lender to take the following steps:

1. Offer the option to extend. Also known as renewing or rolling over your loan, this gives you another 30 days to pay back your loan. Though you might be charged a fee to extend it.
2. Offer a payment plan. If you still can’t repay, your lender might offer a more affordable payment plan before taking steps to repossess your car.
3. File a lawsuit. Your lender must file a legal claim on your car with a civil court before repossessing the vehicle.
4. Repossess your car. Sometimes you’ll have a chance to drive your car to the lender and remove your belongings. Otherwise, they’ll come to your home and take it from you.
5. Sell your car. To collect on the money you owe, your lender sells your car in an auction. Some states require lenders to only keep funds that cover your loan and the cost of repossession. Others let them keep everything.

Title loan defaults by numbers

Bottom line

Auto title loans are one option if you need money today and your personal finances are stretched thin. But they’re expensive and come with a high rate of default, meaning you could lose your car if you can’t afford repayments.

Check out our guide to payday loans to learn about even more options for fast cash when you have bad credit.

Frequently asked questions

• How can you get denied for a title loan?

It’s possible to get denied for a title loan if you don’t meet the lender’s basic requirements. If your car isn’t valuable enough to support the loan you’re applying for, your application will probably be denied.

You could also be denied if you aren’t a US citizen or permanent resident — or live in a state where title loans are illegal. Make sure you and your vehicle meet your lender’s requirements before you apply.

• What’s a title loan buyout?

A title loan buyout works like refinancing: You take out another loan to pay off your title loan, ideally with more favorable rates and terms.

It’s another way to extend your loan without rolling it over. But like rolling over your loan, you could end up paying more in the long run.

• How can I stop a title loan repossession?

If you’re able to pay off your balance in full right away before the lawsuit is over, you might be able to negotiate a deal with the lender. Otherwise, there’s little you can do once your lender is given a court order to repossess your car.