How do title loans work?

Quick Answer A title loan is a type of loan where you use your vehicle as collateral. You apply for the loan, give the lender your title, and they give you money in return. You can continue to drive your vehicle but the lender keeps the title until the loan is repaid.

Dwayne Dumesle profile picture
Dwayne Dumesle Answer updated on Jun 26, 2023

Fact checked by Steven Hill

In my experience, whether you’re applying for a title loan online or in-store, the process boils down to the same steps.

I’ll guide you through these steps to help you understand how title loans work. Here we go! 🤠

  • Step 1: It all starts with an application. Lenders will want to know who you are, what you drive, where you live, and how much you’d like to borrow. In some cases, they’ll need a few more things from you.
  • Step 2: This is where things get interesting. Your lender will want to inspect your vehicle to determine its value. They’ll usually offer you a loan that’s 25% to 50% of your vehicle’s value. My advice: only borrow what you need, even if you’re offered more.
  • Step 3: This is where you’ll need to pull out your magnifying glass. If all goes well, your lender will present you with a loan agreement. The agreement will outline your interest rate, fees, and the total you’ll need to repay. Please, take your time to fully understand the terms.
  • Step 4: If you accept the terms and sign the agreement, your lender will then take possession of your title (but you keep your vehicle) and disburse the funds to you. You can expect to receive your funds the same day or the next business day.
  • Step 5: This is the final and most crucial step. You’ll need to repay the loan in full (including interest and fees). Once the loan is repaid, your lender will give you back your title. If you don’t repay, the lender can repossess your vehicle.

Congratulations, you just went through the entire title loan process. 😃

Before you go, keep in mind that title loans are an expensive way to borrow — they shouldn’t be your first choice when you need quick cash.

Even if you have bad credit, you may qualify for other options that are more affordable, such as personal installment loans.

If title loans are indeed your last resort, play it smart: borrow what you need and pay it back as soon as possible.

You got this. 👍

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My experience with Sound Financial has been absolutely incredible. I got the quick cash I needed without any hassles. The entire process was simple and transparent.