Everything You Need to Know About Car Title Loans


If you have bad credit and need cash quickly, you might find yourself wondering about car title loans in California and across the country. What are they? How do they work? Are they an effective way to handle an emergency or can they put you in a worse financial situation?

There are pros and cons to these loans, so it’s important to get the facts first so you can make the right decision when you’re in a pinch. Here’s everything you need to know about car title loans so you can make the best choice when facing a difficult financial situation.

What are car title loans?

Car title loans are a form of credit that allows you to borrow money from your car. Essentially, you sign over all or part of your vehicle’s title as collateral and take out a loan for anywhere between $500 and $40,000.


When you repay your loan, you get your title back. The interest rates on these loans can be high—as much as 25% annually—and may cost more than if you borrowed from a bank or credit union.

How do you apply for a car title loan?

As with most other loans, car title loans are initiated by applying for one. If you’re applying for a loan at your local payday or auto title lender, it’s as simple as filling out an application and walking out with cash in hand within 30 minutes.

If you’re going through an online lender, they’ll give you a short pre-approval letter that you can take to your local branch.

What is the approval process like?

The approval process is pretty simple. If you’re a person of average credit and have access to a car, then you should be able to get approved for one. Keep in mind that there are limits on how much money you can borrow, though.

The government regulates how much lenders can give out based on your income and your car’s value, so as long as you meet their requirements, you shouldn’t have any problems getting approved.

Can you get approved if you have bad credit?

This is a tricky question. Every lender has their own approval criteria, and some will say no regardless of your credit history.

Others will say yes as long as you meet their criteria for borrowing money, such as having a steady job and sufficient income. However, if you have bad credit or no credit at all, there are often more hoops to jump through in order to get approved for a loan.

What happens if you don’t pay back your car title loan?

If you fall behind on your payments, car title lenders will take your car back. And if they get their hands on your car before you’ve paid back what you owe, they have every right to sell it at auction. If all goes well for a car title lender, they will make more money off of selling your old vehicle than they did by loaning you money in the first place.

Do you have to have insurance coverage on your vehicle while making payments on your loan?

The short answer is yes. In California, you have to have a policy in place while making payments on your loan.

The only exception to this rule is if you let your insurance lapse and then become involved in an accident where you’re found at fault (if you’re not at fault, there won’t be a problem).

If you don’t want to get into trouble with your insurance company, it is recommended that you keep both policies running simultaneously.

Are there any other requirements related to having an active license, registration, and insurance policy during repayment?

If you have an active driver’s license, registration, and insurance policy on your vehicle at any time during repayment, then you will be subject to a non-purchase fee of 2% per month.

This means that if you borrow $1,000 and only make a single payment in full before taking out another loan on that vehicle, you will be charged 2% of your original loan amount.

What kinds of fees are associated with car title loans? Section: What else should I know about getting car title loans?

Besides interest, you may also be charged additional fees by car title lenders. These include Loan origination fees: Some car title lenders charge a one-time fee that covers administrative costs related to your loan.

Late payment or default fees: Even if you pay your monthly car title loan payment on time, you could face additional charges if you’re late with a subsequent payment or default altogether. Returned check fees: Lenders may charge additional fees for returned checks when payments are due.


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