How to Determine if a Title Loan is Right for You


Finding yourself needing to turn to your rainy-day fund can be a worrying experience, only made worse if your fund is not built up. Financial assistance in the form of a title loan could provide a person with the funds they need to cover their emergency expense. However, a title loan may not be the right choice for everybody. Learning everything there is to know about this form of debt can help a person determine if it’s the right choice for them.

What is a Title Loan?

A title loan is a secured loan that allows a person to borrow money while using their vehicle as collateral. The amount you’re allowed to borrow is typically based on the value of your vehicle, but the majority of title loans are short-term, high interest loans for amounts in the thousands. Title loans typically have very few requirements, which means potential borrowers with poor credit can qualify.

Pros of a Title Loan

As with all forms of debt, there are pluses and minuses to title loans that a person should consider. Some of the prominent benefits include:

  • No credit check required in most cases
  • Quick approval process on the loan
  • Typically, instant access to funds following approval

Cons of a Title Loan

  • Can lead to a cycle of debt if you won’t be able to pay the loan back quickly
  • You stand to lose your vehicle if you can’t repay the loan
  • Shorter tenor loans come with a higher interest rate
  • There may be potential hidden fees you’re unaware of

Important Considerations Before Applying for a Title Loan

When looking at whether or not a title loan is right for you, there are three primary considerations to keep in mind:

1. You need to own your vehicle or have some equity in it

Perhaps the biggest complication in taking out a title loan is that you need to own the title to your vehicle. This means 100% ownership over the vehicle or at least partial equity. This is why trying to get a title loan on a leased vehicle is not possible, as the potential borrower would not have ownership over the car.

2. Car title loans can come with high interest or fees if you don’t have good credit

While there are few requirements to take out a title loan, having a lower credit score may result in the lender offering an abnormally high interest rate. If you are already strapped for cash and not sure you can make a repayment on the title loan in the required time, this may be a reason to avoid taking out the loan.

3. You are at risk to lose your vehicle if you cannot repay the loan

The biggest risk involved with a title loan is the fact that a person’s vehicle serves as collateral. This means that if you are unable to repay the loan, the lender has a legal right to retain the title to your vehicle and take ownership of it. This is why being certain you can repay the loan in a timely manner needs to be a high priority.

How to Apply for a Title Loan

If you’ve decided that a title loan is the right choice for you, learning how to apply for this loan will be your next course of action. Follow the below steps to quicken the application process:

  • Determine the amount you need from a loan. Title loans typically offer 25-50% of the current value of your vehicle, which is something to keep in mind as you determine your needs.
  • Gather personal and financial application items such as your income information, current address, and other applicable materials.
  • Research different lenders in your area and submit for prequalification if applicable.
  • Compare offers from different lenders to see who offers the best interest rate.
  • Submit your application and receive approval or denial.
  • If approved, gain access to funds and begin your repayment process.

Get financial assistance today

For those in need of quick cash, a title loan can be an excellent option to consider so long as you are capable of paying back the debt fast. Consider the various pros and cons to title loans, along with your current outstanding debt, to determine if it is right for you. Get quick access to cash when you need it to avoid being unable to meet your financial obligations.


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