Best Car Title Loans
Need cash fast but have bad credit? Auto title loans might be the solution to your problem. Auto title lenders will lend money even to applicants with low credit scores. And they can often get your money to you within 24 hours.
Common Questions
What is an auto title loan and how does it work?
Typically, you can take out a car title loan for 25% to 50% of the value of your car, though this depends on the lender. Most single-payment auto title loans require payment within 30 days of taking out the loan. In some cases, you can pay back the balance over time as you would a standard unsecured loan.
To qualify for an auto title loan, you must have the title to the car. You can’t currently have a loan out on the vehicle.
Auto title loans are an expensive form of credit. According to a report by the Consumer Financial Protection Bureau (CFPB), the typical auto title loan is for $700, and it has an APR of 300% or 259%, depending on whether you get a single-payment or installment loan (more on these loan types in the next section).
Are there different types of auto title loans?
Single-payment loans typically have a repayment term of about a month, with APRs sitting around 300%. Needless to say, these loans are high-risk. 80% of borrowers find themselves unable to pay off their loan on time and are forced to take out a new loan to pay off the old one. This can result in a dangerous cycle of debt.
Installment loans are not always available from auto title lenders. When they are, you should prefer them. They’ll give you more time to pay off your debt, and they feature slightly lower interest rates (around 259%).
Auto title loan requirements
The eligibility requirements for auto title loans are low. Because the lender stands to gain more if you default than if you repay, you typically don’t need to meet any minimum credit score requirements.
You do, however, generally have to have some form of income to prove your ability to repay the loan.
Other typical requirements include:
A car in driving condition
Proof of insurance
A clear title
Proof of address
A valid ID
The good news is that you’ll still have use of your vehicle when you take out a title loan. However, if you default on the loan, the lender will seize your car and sell it to recoup the amount of the loan
Auto title loans pros and cons
Depending on your needs, an auto title loan has the following benefits:
Anyone can qualify: Auto title lenders sometimes don’t even run a credit check because they’re using your car as collateral. So, if you’ve exhausted all your other options, you just need a working car.
Quick funding: Auto title lenders can usually get your cash to you within 24 hours, either with a check or a direct deposit into your checking account.
You keep the car: Although the lender is using your car as collateral on the loan, you get to continue driving the car while you’re paying back the loan.
There are some drawbacks that you need to know before you start looking for a loan:
Very high APRs: Even if you shop around and compare several lenders to get the best rate available, it’s still going to be high.
You could lose the car: If you default on your loan, you have two options: lose your car or borrow again to repay the loan. According to the CFPB report, more than two-thirds of auto title loans were taken out by borrowers who re-borrowed six or more times.
You might need to up your insurance: Since your car is collateral for the loan, the lender could lose its investment if you get in an accident. As a result, the lender may require that you meet certain minimum insurance standards before you can borrow.