Car title loans may give you with instant cash, but they may not be the best choice for you. If you fail to repay the loan in a timely manner, you risk losing your vehicle.

To avoid the risks of a car title loan, evaluate your other options before putting up your automobile as collateral.

A title loan is a loan that is secured by the value of your car’s equity

To get a short-term secured loan, you must have the title to your car, and the amount or percentage of the vehicle’s value can be borrowed. You may be able to get the money you need from a title loan within 24 hours if you match the standards. Lenders have the power to confiscate your vehicle if you fail to make your payments on time. The majority of auto title loan providers only lend on automobiles that have been paid in full, but some will make exceptions for vehicles that still have debt. Vehicles with outstanding loans are known as “registration loans,” and they are used to get auto title loans.

Loan terms, loan amounts, and interest rates will vary by state and lender. Auto title loans might range from $100 to $10,000, on the other hand. Some jurisdictions enable borrowers to take out a loan against their vehicle’s title for a longer amount of time than the national average. You can recoup anywhere from 25 to 50 percent of the value of your boat, RV, or motorcycle. Your monthly repayments may be increased if fees for loan origination, processing, and paper work are added in.

When applying for an auto title loan, you’ll have to provide a loan application, proof of auto insurance, a photo ID, and, if necessary, a set of keys to your vehicle (not all states allow lenders to hold keys). Additionally, you may be required to have a roadside assistance plan or a GPS tracking device installed by some lenders.

When it comes to obtaining a car title loan, how are they financed?

It is tough to pay back a car title loan on time because of the hefty interest rates. APR is likely to be much over 300 percent even if a title loan has a 25 percent monthly finance cost. A typical $1,000 car title loan comes with fees and interest of around $1,200. Auto title loans often cost half of a borrower’s monthly income to repay.

Some states allow you to extend or roll over your car title loan if you don’t pay it off within the 15- or 30-day terms, depending on your state. In order to keep your car, you’ll have to pay a higher interest rate on the loan. Additional administrative costs and fees may apply, and you may be required to make a single payment at the end of the term or a series of payments over a longer length of time than originally agreed.

There are both advantages and downsides to using a car title loan

A car title loan may be an option if you need money quickly, but it has drawbacks as well. Many people should only resort to it as a last resort.


  • As long as you match the requirements, you can get money the same day after applying for a loan.
  • As a general rule, most lenders do not do a credit check; instead, they base their loan decisions on the borrower’s ability to pay and how much the vehicle is worth.


  • Payment terms vary from 30 days to 12 months depending on the state, but some jurisdictions permit multiple rollovers if necessary.
  • High interest rates and borrowing costs: An APR of 300 percent is average for a monthly interest rate of 25 percent.
  • You could lose your car if you can’t keep up with the payments on your loan: Lenders can either sell your vehicle or sue you if you don’t pay back the loan in full.
  • You can’t drive if you don’t own or owe a lot on your vehicle. If you’re applying for a loan, you’ll need to have paid off the majority of your car’s loan. Several states only allow a single car loan at a given time.
  • If the earnings from the sale of your repossessed vehicle fall short of the balance owed to the lender, you may be asked to make up the difference.

Car titles are no longer required to secure a loan

Before you take out a car title loan, you need think about a few other factors. Payday loans, like vehicle title loans, have short repayment periods and significant fees, so they aren’t a viable option. If you’re looking for a loan with a lower interest rate and a longer repayment period, consider some of the possibilities listed below.

A personal loan with a cosigner

Personal loans have lower interest rates and longer repayment terms than automobile title loans. The interest rate on an unsecured loan is often greater than that on a secured loan because there is no security required. Secured personal loans necessitate some form of security, but because of this, they are more readily available and may have better conditions.

It is possible to receive a personal loan if you have bad credit by applying at CitrusNorth with a cosigner if you are worried about your score. Cosigners are people who promise to pay the loan if you don’t. The lender’s risk is reduced by this.

A loan from a financial institution

Consider applying for a personal loan via your bank or credit union if you already have a relationship with them. Personal loans from a bank might be secured or unsecured, but a small local bank or credit union may provide better terms than a huge national bank.

Cash advance on a credit card

For short-term cash, a credit card may be a choice, but if you don’t pay it off before your due date, you’ll have to pay a higher interest rate. If you have good credit, you can get a new credit card with an interest rate of between 16 percent and 23.23 percent APR for regular transactions. Keep in mind that credit card cash advances have significantly higher interest rates and fees, with APRs as high as 25%. Nonetheless, these rates are typically lower than those of a car title loan.

Make a deal with your lenders

Consult with your creditors before opting to take out a new loan. Just let them know what’s going on with your finances and see if they’ll be willing to work with you on something.

Krystel Shaylee Hudson

Loans Writer at Citrus North | Website

Krystel is a Citrus North personal finance writer. She is a freelance personal finance writer located in Dallas. She is interested in writing about all kinds of personal finance issues such as mortgages, debt or student loans, auto financing, and personal loans. In the past, Krystel worked in search engine optimization (SEO) and affiliate marketing for a major home improvement business. When she’s not working on her computer, Krystel can be found working as a volunteer or trying out new coffee places.