How To Make More Payday Loans Near Me 550 By Doing Less

Documents You’ll require

Fees and Rates

A good example of a Title Loan

The Bottom Line

Personal Loans, Lending

Car Title Requirements for a Loan

By Kimberly Rotter

Updated May 14, 2021

Review by Thomas Brock

An auto title loan is short-term loan that is secured by the car of the borrower can be used to secure collateral for the loan. Most of the time, consumers don’t qualify for other financing options.

If you live in a state that permits auto title loans (see states that Allow Car Title Loans), here’s how to get one. The borrower takes the car and necessary paperwork to the lender. While some title loan applications can be found online, lenders still need to verify the condition of the vehicle and also the completeness of the documentation prior to releasing the funds. The lender keeps the title to the car, places a lien on it, and gives the loan to the applicant.

The loan limit is usually between 25% and half of vehicle’s worth in cash ( The borrower pays back the loan, plus charges and interest, within the time period permitted (usually thirty days) and reclaims the title, lien-free.1

The most important takeaways

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

They are often associated with subprime lending, as they often involve high-interest rates and borrowers with low credit ratings. and not all states allow them.

To qualify for an auto title loan you’ll have to submit evidence that proves that you’re who you say you are, that you have your own vehicle, you’ve earned a living and have at least two references.

Additional steps are sometimes necessary to decrease the risk of the lender for default, like installing GPS trackers on the car to assist in potential repossession.

Documents You’ll require

In order to get a car title loan which is also known as a pink slip loan, in most cases the borrower has to own the car in full; there may be no liens attached to the title.1 Lenders also require certain paperwork, including any or any of these:

Original vehicle title showing sole ownership

Government-issued identification matching the name on the title.

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

Current vehicle registration

Documentation of the insurance company’s coverage for vehicles

Recent pay stubs or other evidence of the capacity to pay back the loan

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

Copies of the keys to the car

Some lenders also require some lenders also require a GPS tracking device to be connected to the car in the event of default and the lender wins the right to repossess the car. Certain of these devices allow the lender to deactivate the vehicle remotely.1

You do not need an excellent credit score to be eligible for a title loan. In fact, the majority of title loan lenders don’t even look at your credit score at all, since the loan depends entirely on the resale value the vehicle. Likewise, you do not need to be employed to be eligible for a title loan.1

Rates and Fees

Title car loans are significantly more costly than traditional bank loans. The rates of interest differ, however those states in which the rate is not capped typically, it is fixed at 25 percent per month or 300 percent annually.2 This means that a person who takes out a loan of $1,000 must to pay back $1,250 by the end of the thirty days to avoid going into default.

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

(For more details on this topic, see: Car Title Loan Limits).

A good example of a Title Loan

Say that Maria has recently lost her job and has to work to make ends meet to pay rent. In a last-minute solution she chooses to take out cash using the title of her car loan against her vehicle, which currently has a market worth of $2,500. The loan provider will extend her a car title loan worth $1250.

In the process of applying, Maria needs to provide proof in the form of a title (that she owns the car) along with additional documents. The interest rate was advertised as being at 20% over the 30 day period of loan however, Maria was mistaken in thinking that interest rates were already annually calculated. The actual annualized rate (APR) in fact was 240 percent! Much higher than Maria would have accepted in a heartbeat.

At the end of the one month period, Maria was required to repay $1,500, which is significantly higher than the approximately $1,270 she had anticipated. Given her desperate financial situation, Maria was unable to find the additional $230 and was thus forced to forfeit the title to her car.

The Bottom Line

The ideal candidate for a car title loan is someone who owns their vehicle in full and is aware of the potential costly loan and has a reasonable expectation of having the cash to repay the loan prior to the time when the repayment period runs out. If there’s no concrete and realistic strategy for paying off the loan, a car title loan can amount to selling the car for only a fraction of the value.

A lot of borrowers who take out title loans renew their loans several times, making the loan more costly overall. So, again the most crucial factor is ability to repay the loan by the due date.

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