What Do I Need to Know About Car Title Loans?

Important Information to Have About Car Title Loans

A title loan is a type of secured loan that typically has shorter terms than traditional loans from a bank or credit union. At Max Cash, we have serviced over 4 million customers.5 We have both the knowledge and experience to thoroughly explain everything you need to know about car title loans. 

Whether you need cash quickly or to refinance an existing title loan, we can help you find a lender today!

What makes car title loans different from other loan options? The key differences between title loans and traditional bank loans are:

  • How Quickly They Get Funded
  • Collateral is Used to Secure the Loan
  • Bad Credit is Not Always an Issue5

Some title loan lenders can offer streamlined application processes, which can make it easier to access quick funding. In order to qualify for a car title loan, you are required to pledge an asset as collateral to secure the loan. Since collateral is used to secure your title loan funding, the lending risk is minimized. So, your credit rating may not be an issue during your application, although it is still a factor that is considered. Borrowers without a perfect credit score can still apply for a title loan.

When the loan is complete, the title lender will place a lien on your vehicle title, and it will remain there until the loan is completely paid off. But, you can still drive your vehicle throughout the duration of the loan if you pay it back on time. Typically, you can get a title loan for 25 to 50 percent of the value of your car.1 The value of your vehicle and your income are the two main factors that contribute to the amount you can borrow through a title loan.1 Depending on your state of residence and your lender, you may be expected to repay the loan within 30 days.4

Over 32% of Americans struggle to handle unexpected expenses. Title loans are commonly used to cover unexpected expenses, pay off medical debt, and consolidate debt. Car title loans are a quick way to get cash fast, and you can typically receive your money in as little as one business day.5 If you aren’t happy with your loan terms, you can refinance your current title loan if it is in good standing.5 And, in some cases, you can roll over your loan if you need more time to pay it off. 

How Does the Title Loan Process Work?

The title loan process isn’t complicated. To get a title loan, you will first need to contact a title loan lender. You will be required to provide personal information, documents, and a little bit of information about your car. This information generally includes the make, model, year, and current mileage on the odometer. The title lender will also use this information to value your car and determine your potential loan amount. Title loans can range from 25% to 50% of the value of the vehicle.1  4 Many different types of vehicles can be used to secure a title loan, not just automobiles. Although cars, by far, get used the most as collateral for a title loan.

You will usually need to have a lien-free title, which means that no one else has a claim against the asset. In this case, the asset is the vehicle. If you are currently financing your vehicle, your vehicle may still qualify as collateral for a title loan if you have positive equity, although it is not a common occurrence. The term “positive equity” refers to a vehicle with a greater value than its remaining loan balance.

If you qualify, the lender will give you a loan offer, which includes the interest rate and any fees associated with the loan. If you sign the loan agreement, you may be asked to physically give the lender your title, although some title lenders do not require actual possession of the car title itself. Then, you can often choose between a few different ways to collect your money:

  • Get Cash at a Money Transfer Location 
  • Get a Check in the Mail
  • Or Choose Direct Deposit

What Rates and Terms do Title Loans Have?

The interest rates for title loans vary from state to state and from individual lenders.4 Here at Max Cash, we have seen title loan interest rates range anywhere from 29% to 300%.4 APR is the annual percentage rate, which is the interest that is based on a yearly total. Some interest rates for title loans are monthly, so if your APR is 300%, then the monthly finance fee is 25%. 

If your loan is still in good standing, you can refinance a title loan if you can’t afford your current loan terms. In some states, you can roll over your loan, but you may have to pay more fees, and you will have to pay the interest over that extended period again as well. 

The good news about title loans is that your car acts as the collateral for the loan. This means that even those without good credit ratings can get cash quickly to cover unexpected expenses. But, this does not mean that title loans come without risks.

You can potentially risk losing your car when you take out a title loan. If you fail to repay the loan, refinance it, or communicate with your lender before the due date, they may repossess your car if you default on the loan. This not only deprives you of the use and ownership of your vehicle, but it can also negatively impact your credit rating.

Apply for a Title Loan with Max Cash Today

Whether you need cash quickly or need to refinance an existing title loan, we can help you find the lender that will be the most useful to you. Start an application today, and we can filter through our network of verified lenders to connect you with a car title loan.5 At Max Cash, we do the hard work for you!

With our network of verified lenders, we can connect you with a car title loan. At Max Cash, we do the hard work for you!

By Jordan Radcliff

Jordan is a writer for Max Cash who covers a wide range of topics, including personal loans, credit scores, and side hustles.