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Documents You’ll require

Fees and rates

An example of a title loan

The Bottom Line

Personal Loans, Credit

Car Title Loan Requirements

By Kimberly Rotter

Updated May 14 2021

Review by Thomas Brock

A car title loan is short-term loan that is secured by the borrower’s car is used as collateral against the loan. Borrowers are typically consumers who do not qualify for other financing alternatives.

If you live in a state that permits auto title loans (see: States That Accept Car Title Loans), here’s how to get one. The borrower brings the vehicle along with the necessary documents and other documents to the loaner. While some title loan applications are available on the internet, lenders must to confirm the condition of the vehicle and the completeness of the documents prior to releasing the funds. The lender keeps the title to the car and places a lien on it, and gives the loan to the applicant.

The loan limit is usually 25 to 50% of the car’s worth in cash ( The lender pays back the loan in full, including the interest and fees within the time frame that is allowed (usually thirty days) and reclaims the title, lien-free.1

Important Takeaways

Title car loans are short-term secured loans that borrow against the borrower’s car as their collateral.

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

To obtain a title loan you’ll have to submit proof that you’re who you are and you own your car, that you’ve earned a living, and at least two references.

Other steps may be necessary to decrease the lender’s risk by installing GPS trackers on the vehicle to assist in potential repossession.

Documents You’ll Need

In order to get an auto title loan, also called a pink slip loan generally, a borrower must own the vehicle outright; there may be no liens against the title.1 Lenders also require certain paperwork, including any or all of the following:

Original title to vehicle showing sole ownership

Government-issued identification matching the name on the title

Utility bill or any other evidence of residence that matches the name on the title.

Current vehicle registration

Proof of vehicle insurance

Recent pay stubs , or any other evidence that shows the ability to repay the loan

Names, phone numbers and addresses that are at minimum two valid references

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 of default and the lender wins the right to seize the vehicle. Certain of these devices are designed to permit the lender to shut down the vehicle remotely.1

It is not necessary to have excellent credit score to qualify for an auto title loan. In fact, the majority of title loan lenders will not look at your credit score at all as the loan is based solely on the resale value of the vehicle. Likewise, you do not require employment to be eligible for a Title loan.1

Rates and Fees

Title car loans are significantly more costly than conventional bank loans. The rates of interest vary, but those states in which the interest rate is not set in a cap the rate is usually determined at 25% per month or 300 percent annually.2 This implies that a customer who has borrowed $1,000 will have to repay $1,250 at the end of 30 days to avoid going into default.

Most lenders charge a lien fee. In states where title lending is not controlled, some lenders charge origination fees, document fees processing fees, key fees or other fees.1 The costs will add up quickly and could amount to more than of $25 (or more) in addition to fees for loan and interest charges.3 Make sure you include all fees when you are calculating the total amount of the loan.

(For more information on this subject, see: Car Title Loan Limits).

Example of a Title Loan

Let’s say that Maria was recently laid off from her job and has to work to make ends meet to pay rent. For a temporary solution, she decides to borrow cash using a car title loan against her vehicle that has a current price of $2,500. The loan provider agrees to extend her car title loan at $1,250.

In the process of applying, Maria needs to provide evidence that she is the owner of the title (that she is the owner of the vehicle) and additional documents. The interest rate was advertised as 20percent for the 30-day period of loan however, Maria made the mistake of thinking it was already an annualized rate. The actual annualized rate (APR) was actually 240 percent! This is much higher than Maria would have ever accepted as a fact.

After the one-month period, Maria was required to repay $1,500, significantly more than the roughly $1,270 she was hoping to pay. Due to her financial crisis, Maria was unable to come up with the additional $230 and was required to surrender the title to her car.

The Bottom Line

The most suitable applicant for a title car loan is someone who owns their vehicle in full, understands the potentially costly loan and has an expectation of having access to the cash to repay the loan before the repayment period expires. If there is no clear and realistic plan to pay off the loan the car title loan could mean selling the vehicle for half or less of its value.

A lot of borrowers who take out title loans renew their loans multiple times, which makes the loan more costly overall. Also, the most critical consideration is the ability to pay back the loan on or before its due date.

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