4 Things You Need to Know About Title Loans

A title loan can be a great option when you need fast cash to deal with an emergency or pay bills. These loans offer short-term credit using your car’s title as collateral, and some lenders don’t conduct a credit check or even need proof of employment or income. This makes title loans easy to access, even for customers with poor credit history.

However, as with most loans accessible to clients with bad credit scores, the appeal of these cash loans is shaded by their high costs and extreme consequences if you fail to repay what you owe. Here are a few things you need to know about title loans.

1. You must own a car or have ownership of it to get a title loan

A title loan is a secured loan that uses your auto as security or collateral. The loan typically ranges between $100 and $5,500, though some lenders may allow you to borrow up to $10,000 or even more. Once approved for the loan, you will give the lender a clear title to your car without any liens. Besides your car title, your lender will typically want to see your vehicle, proof of insurance, and a government photo ID. If you need fast cash, you can use your car as collateral to get a title loan from simple cash title loans at affordable rates. 

2. Title loans have high fees and interest rates

Title loans often have a median monthly fee of 25%, which translates to an annual percentage rate (APR) of around 300%. Title loans lenders usually add other charges to the credit amount, including document, processing, and loan initiation fees.

Costs increase with rollovers, and like with payday loans, the lender may allow you to roll it over into a new loan if you can’t pay a title loan when it’s due. However, rolling over the loan will add more fees and interest to the amount you owe the lender.

3. You might lose your car if you can’t repay your title loan

When you fail to pay off the money you owe, your loan lender might reclaim your car even after making partial payments. When you get a title loan, some lenders may push on installing a GPS or a starter interrupt device on the car to help locate and impair its ignition system remotely for easier repossession.

4. Most title loans are a result of refinancing

While title loans can be short-term, that doesn’t mean the lender gives them for short-term use. According to the Consumer Financial Protection Bureau, about 80% of title loans are repaid without reborrowing through a rollover. That means the title loan agencies don’t just benefit from the clients’ inability to afford their loans but depend on it. Short-term loans are not meant to be repaid in a series of small, manageable payments but are designed to be paid off in one colossal amount.


Before applying for a title loan, consider all the affordable options. However, if it’s the only alternative for fast cash, compare a couple of offers to get the best possible APR and only borrow what you can afford to pay back within the given loan period. In addition, be sure to read the loan terms and conditions carefully to see whether there are additional costs and fees.

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