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What is a Car Title Loan?

Car Title Loan

Most of us are familiar with personal loans, credit cards, and payday loans. A type of loan that we might not know so much about, though, are car title loans. If you have bad credit or are looking to get a loan for a large amount, car title loans are one of the options that are available to you.

Secured Loan

A car title loan is a type of secured loan. A secured loan is a loan where you put up one of your assets as collateral, generally a house or a car. In the case of a car title loan, it is your car that is put up as collateral. If you do not maintain your repayments on a secured loan, then the asset you put up as collateral for the loan will be seized by the loan provider.

Generally, secured loans are offered when people wish to borrow a large amount of money and the provider feels that extra security is required in order to assure the safety of their investment. They are also offered when people need a longer than usual repayment period or when they have a bad credit history.

How to Get a Car Title Loan

To get a car title loan, you would approach a provider with your car title, insurance documentation, a photograph and relevant identification. You must own your car outright; you can’t take out a car title loan based on a car that you have not yet finished paying for. 

The provider would then carry out a credit check and they would assess the value of your car. The credit check is based on your current credit score, as well as any loans you currently have outstanding or have defaulted on in the past. Based on this information, they would offer you a loan. The process for getting approved for a car title loan is often quite quick since there is an emphasis on getting cash to the borrower as quickly as possible.

Take a look at procedures to apply for a car title loan online – fast money car title loans for more detailed information.

Loan Amount

The amount that you would be offered would be dependent on both your credit rating and the value of your car. Generally, you could expect that the lending company would agree to lend you up to between 25% and 50% of the value of your vehicle.


Car title loans often have a much higher rate of interest than other types of personal loans, particularly if you have a poor credit score. It’s important that you factor this in when working out the total amount that you will repay before agreeing to take out the loan.

The repayment period will generally be quite short, somewhere between one and twelve months. If you default on your payments the lending company may take possession of your vehicle or install a device that prevents it from starting so that you can’t use it until the balance is repaid.