What is a title loan?

Quick Answer A title loan is a type of secured loan where you use your vehicle's title as collateral to get quick cash. You still get to drive your vehicle, but if you fail to repay the loan, the lender may take possession of your vehicle. Title loans are expensive and should be used with caution.

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Doreen Dumesle Answer updated on May 28, 2023

Fact checked by Steven Hill

A title loan is a type of secured loan for bad credit, where you can pledge your vehicle’s title to secure cash in a hurry.

Many borrowers use these types of loans to cover unexpected expenses (e.g., car repair, medical bills, home maintenance, etc.) or to bridge the gap between paychecks.

The most popular type of title loan is a car title loan. However, you can get a title loan on many other types of vehicles, such as:

  • Trucks
  • Motorcycles
  • RVs
  • Boats
  • Utility trailers, and more.

One of the main benefits of a title loan is that you get to keep your vehicle and continue driving it throughout the repayment period. So, you can still get to work — which I’m sure we're all eager to do. 😄

Getting a title loan is relatively easy, namely because there are no credit checks required. A lender simply assesses your vehicle and (in some cases) your income, and extends you a loan based on the value of your vehicle and your proven ability to repay.

Learn: What do I need for a title loan?

The lender then holds on to your title until you repay the loan (plus any interest and fees). Once your loan is repaid, your title is returned to you. Pretty simple.

Because title loans don't require credit checks and have less stringent income requirements, they typically carry a high interest rate and you run the risk of losing your vehicle if you’re unable to repay.

Learn: Do title loans go on your credit?

For that reason, I would only recommend a title loan if your options are indeed limited. I would also urge you to double, quadruple-check that you can afford to repay the loan and to do it quickly. By doing this, you can avoid their high cost and dodge the dreaded “debt loop”. 😎

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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.