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15.02.2023 от sammierickel780 Выкл

Documents You’ll Be Needing

Fees and Rates

Example of a Title Loan

The Bottom Line

Loans Personal Lending

Car Title Requirements for a Loan

By Kimberly Rotter

Updated May 14 2021

Review by Thomas Brock

The car title loan is short-term loan in which the borrower’s car is used as collateral for the loan. The majority of the borrowers are consumers who are not eligible for other financing alternatives.

If you’re in a state that permits the use of car titles loans (see states that Allow Car Title Loans), here’s how getting one works. The borrower brings the vehicle along with the necessary documents to the lender. Although certain title loan applications are available on the internet, lenders must to confirm that the car is in good condition — and the completeness of the paperwork — before releasing money. The lender retains the title to the vehicle it, then places a lien over it, and transfers the loan to the borrower.

The loan amount is typically 25 to 50percent of car’s worth in cash ( The lender pays back the loan with fees and interest within the time frame permitted (usually thirty days) and then reclaims the title lien-free.1

Important Takeaways

Car title loans are short-term secured loans that use the car that the borrower is using as collateral.

They are associated with subprime lendingbecause they usually involve high-interest rates and borrowers with low credit ratings. And not all states permit them.

To get a title loan you’ll have to submit evidence that proves that you’re who you say you are, that you own your car, that you’ve earned income and that you have two references.

Other steps may be required in order to reduce the risk for lenders, such as installing GPS trackers on the vehicle to aid in a possible repossession.

Documents You’ll Need

To qualify for a car title loan, also called pink slip loan generally, the borrower must have ownership of the vehicle in its entirety There are no liens attached to the title.1 Lenders also require certain paperwork, including any or any of these:

Original title of the vehicle indicating sole ownership

Identification issued by the government that matches the name on the title

Utility bill or other proof of residency that matches the name on the title

Current registration of the vehicle

Documentation of the insurance company’s coverage for vehicles

Pay stubs from recent pay or other evidence that shows the ability to repay the loan

Names, phone numbers and addresses from at least 2 valid references

Work copies of the keys to the car

Some lenders also require the use of a GPS tracking device to be connected to the car, in the event that the borrower fails to pay and the lender gets the right to repossess the vehicle. Some of these devices allow the lender to shut down the car remotely.1

You do not need excellent credit score to qualify for an auto title loan. In fact, many title loan lenders will not check your credit at all as the loan depends entirely on the resale value the vehicle. Additionally, you don’t need to be employed to be eligible for a Title loan.1

Rates and Fees

Title car loans are considerably more expensive than traditional bank loans. Rates of interest can differ, however in states where the interest rate is not set in a cap the rate is usually fixed at 25 percent per month or 300 percent annually.2 This means that a consumer who borrows $1,000 will need to pay back $1,250 by the end of 30 days to avoid default.

Most lenders charge a lien fee. In states where title lending isn’t controlled, some lenders charge origination fees, document fees, processing fees, key fees, or other fees.1 The fees will add up quickly and could amount to an additional of $25 (or more) over fees for loan or interest charges.3 Be sure to add all charges when you calculate the total amount of the loan.

(For more details on this topic for more details, check out: Car Title Loan Limits).

An example of a title loan

Say that Maria has recently lost her job and she has to work to pay the bills and pay her rent. For a temporary solution she chooses to take out cash using the title of her car loan against her vehicle, which currently has a market price of $2,500. The loan provider will extend her car title loan for $1,250.

In the process of applying, Maria needs to provide proof that she is the owner of the title (that she owns the car) and additional documents. The advertised interest rate was stated as being at 20% over the 30-day length of loan, but Maria did the wrong thing by assuming that interest rates were already annually calculated. The actual annualized amount (APR) is actually 240%! Much higher than Maria would have ever accepted as a fact.

After the one month period, Maria was required to repay $1,500, significantly over the $1,270 she was hoping to pay. In the face of her dire financial situation, Maria was unable to find the additional $230 and was thus obliged to surrender the title to her car.

The Bottom Line

The most suitable person to take advantage of a vehicle title loan is someone who owns their vehicle in full, understands the potentially expensive cost of the loan and has a reasonable expectation of having access to the money needed to pay back the loan before the repayment period runs out. If there isn’t a concrete and realistic strategy to pay off the loan or loan, a car title loan could mean selling the vehicle at half or less of its value.

Many borrowers with title loans renew their loans several times, making the loan much more expensive overall. So, again the most crucial factor is ability to repay the loan prior to or on its due date.

(For more information, see Getting a Car Title Loan.)