What to Know About Auto Title Loans

Almost every person sometimes needs fast money to pay medical bills, repair a car or other unforeseen expenses. It is in such cases that a car title loan, which can be obtained from non-bank organizations, will be an excellent solution. If you approach taking such a loan thoughtlessly, then you can end up in a debt hole. That is why you need to understand all the subtleties of title loans: on what conditions they are issued and what interest rates are put on them by lenders.

What is a title loan?

A car title loan or just a title loan is issued for a period of 15 to 30 days and is therefore considered a short-term loan. To obtain this type of loan, you must provide a vehicle as collateral, after which you will receive an amount ranging from 25% to 50% of the value of the car.

Getting a title loan – steps

If you want to apply for a car title loan, you must transfer 51% of the ownership of the car to the lender. You must be the sole owner of the vehicle. It is desirable to be free of other title loans, although some lenders will issue new loans with the previous car title loan almost paid off. The required documents for a title loan are:

  • ID card;
  • proof of income;
  • valid email, phone number and bank account.

The lender also prefers to personally assess the value and condition of the car, and may also require a working copy of the keys.

How much can I get with online title loan?

After you get a positive response from the lender, you can get from 25% to 50% thanks to the title loan. On average, you can get from 100$ to 10,000$ depending on the cost of the car and the lender. Usually the possible loan amount is estimated at a personal meeting.

How much do title loans cost?

After receiving a title loan, the ownership of the vehicle passes to the credit institution until the borrower repays the principal amount, the lender’s financial expenses and other fees stipulated by the loan agreement.

A loan secured by a car is provided at high interest rates. Loans of this type carry an average monthly fee of 25 percent, which corresponds to an annual interest rate of 300%. In addition, the terms of the loan agreement may provide for fees for processing the application and issuing a loan. There is a chance that you, as a potential borrower, will have to purchase a roadside service plan, which will increase the cost of the loan.

For example, you want to borrow $1,000 for 30 days.

The financial commission under the loan agreement is 25%, therefore, the total amount of overpayment on this loan will be $ 250 without paying other fees stipulated by the loan agreement. Therefore, the lender gives you $1,000 in exchange for transferring ownership of your car to him.

Advantages and disadvantages of title loans

Title loans, like any other financial product, have both advantages and disadvantages.

Their main advantages are:

  • Receipt guarantee. Even if a potential borrower’s credit history is not satisfactory, he can get a loan approved if the borrower has the right to own a car and the borrower’s income meets the requirements of a credit institution.
  • Simple loan process. Due to the lengthy credit check procedure, the loan approval and disbursement process usually does not take much time.
  • Quick access to credit funds. If the potential borrower meets all the requirements, the potential borrower can receive a loan on the same day.


  • High risk of losing the car. The biggest disadvantage in the case of applying for a title loan is the likelihood of losing the car if the loan is not repaid. According to statistics, approximately 20% of borrowers face such a problem when applying for a title loan.
  • High interest rates. Like many other quick loans, title loans involve a high APR.
  • The probability of hitting a debt loop. Approximately 80 percent of borrowers fall into a vicious circle and take out a new loan as soon as they pay off the previous one. Borrowing can easily become a habit and confuse you. That is why it is important to approach them thoughtfully and responsibly, without losing your head.

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