What Is a Title Loan?

If you’re suddenly blindsided by an emergency, but you’re not sure how to pay for it, a title loan could be the answer.

What is a Car Title Loan?

A title loan is a type of loan in which the lender temporarily holds your car, truck, or motorcycle’s title as collateral for the duration of the loan. You keep your vehicle.

A title loan is very attractive, because you can receive payment within only 24 hours and the requirements for getting one are minimal. Read on for more details about how a title loan could help relieve your debt.

How a Title Loan Works

Here is how a title loan works. Title loans are secured by using your vehicle as collateral. When you sign up for the loan, you surrender the vehicle’s title, which is returned to you upon repayment of the loan.

Loan amounts are typically around $1,000, but they can sometimes be as small as $100 or as large as $10,000. The amount depends on state laws. Each state has different laws regarding title loans.

The loan amount is calculated as a percentage of the vehicle’s resale value. Lenders also consult the Kelley Blue Book to set the amount.

These loans have an immediacy that can be a boon if you’re in dire straits: for small amounts, the loan may be cleared in as little as 15 minutes. Otherwise, 24 hours is the norm. Repayment is typically required in 15 to 30 days.

What Qualifies You for a Title Loan?

One of the advantages of a title loan is that there are simple qualifications for receiving one.

  • You must have a valid drivers license, proof that the car is paid in full, that it is lien-free and that it has no current financing.
  • You’ll also need to provide proof of income, car insurance and proof of residency.

A car title loan is an uncomplicated one. The application is simple to fill out.

Another benefit is that you may qualify for a loan even if you have bad credit.

This type of loan can be a good solution for someone who has bad credit or who has had difficulty getting a bank loan. Lenders mostly care about the vehicle’s condition and value.

Which States Offer Title Loans?

Not all states offer title loans. The ones that do are Alabama, Arizona, California, Delaware, Florida, Georgia, Idaho, Illinois, Louisiana, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, Oklahoma, Ohio, South Carolina, Tennessee, Texas, Utah, Virginia and Wisconsin.

How Do I Pay Back a Title Loan?

When the car title loan’s term ends, the outstanding payment is usually due in full. If the borrower can’t repay the lender, the balance rolls over and they can be furnished with a new title loan.

Can I Apply for a Title Loan Online?


The internet has made it easy for a borrower to apply for a title loan online. Many lenders have online applications for title loan pre-approval or approval. They require the same answers as in-person applications.

You may have to get your check or cash in person, and you can also make payments in person or set up an automatic payment via your bank or the lender’s website. Work with your lender to get those details.

Now that you know the title loan definition, you can see how it could be a lifesaver during a financial catastrophe. The online signup process is simple and straightforward, and you’ll get your money in 24 hours or less, on usual business days.

When you urgently need to pay for something, a car title loan may be a great solution.

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