If you’re in need of financing for a large expense or you’ve been hit with an emergency that’s too much for your savings to handle, you’ll need a way to get money quickly. A personal loan is one option, but this will require you to have good credit if you want a decent annual percentage rate (APR). Personal loans are also typically long term, which means you’ll be making payments for months or even years.
You could pawn something you own, provided you have property with enough value to get the money you need. For the typical consumer who doesn’t own a home, their most valuable possession is their car.
The problem with that is you’ll be giving up your method of transportation, making it much harder to get where you need to go. Fortunately, there’s a way you can pawn your car and still drive. If you get a title loan, you only need to give the lender your car’s title while you pay back what you borrowed. You’ll still have the car and can use it as much as you like in the meantime.
Interested in learning more about title loans? Here are the frequently asked questions and their answers.
How can you pawn your car and still drive it?
Normally, if you pawn one of your possessions, you’re taking it to a pawn shop and selling it to them for a fraction of its actual value. When you pawn your car with a title loan, you’re only using your car for collateral on the loan.
There are two types of loans you can get – secured and unsecured. What differentiates the two is whether there’s collateral attached, which effectively “secures” the loan because it gives the lender something to repossess should you default.
Just like when you pawn an item, when you get a title loan, the lender will loan you a portion of the car’s value. It’s then your responsibility to pay back what you borrow, along with any interest and fees, to get your title back. If you fail to do so, the lender can come repossess your car. After that, they can sell it.
The advantage of pawning an item is that you’ll get money that you don’t need to pay back. The advantage of a title loan is that you’ll be able to borrow money based on your car’s value, not your credit score, and you’ll keep your car by making your payments on time.
What if you’re still financing your car?
Many potential title loan borrowers are still paying off their auto loans. This can cause an issue with obtaining a title loan, because title loan companies typically require that you own the car and that the car has a lien-free title.
There is a way around this with some title loan companies. When you’re financing a car, you’re slowly building up equity in it, and many title loan companies will issue you a loan based on that equity that you’ve built up. These loans are often called either auto equity loans or second lien title loans.
Despite the different name, auto equity title loans function the same as title loans and follow the same regulations. The difference for you is that if you fail to pay back your title loan and have your car repossessed, you’ll remain responsible for paying off your auto loan. This means that you’d end up making payments on a car that you no longer have.
You also typically can’t get as much money with an auto equity title loan as you could with a standard title loan, because you won’t have as much value in terms of equity as you would if the car was paid off.
What are the requirements to apply for a title loan?
Title loans have very few requirements, which make them a great choice if you need something quick and easy. You’ll need to be at least 18 years of age or older due to a federal regulation, and the lender will likely ask to see your government-issued ID so they can verify your age.
You’ll need to have a car. As mentioned, for a traditional title loan, you must own the car and it can’t have any liens on its title. Otherwise, you’ll need to look for auto equity title loans.
The lender will inspect your car to determine its condition. This helps them figure out how much they can loan you. After that, you just hand over the title to them and get your money.
How long do title loans last?
Title loans are supposed to be short-term loans, and you won’t see lenders setting up title loans with terms over a year in length. The usual title loan term lasts for 30 days.
This doesn’t mean that your only option is paying off the title loan after 30 days, though. Lenders typically also allow you to extend the loan if you need to, and this is also called rolling over the loan. You can do so by paying any fees and interest charges you currently owe, and then you get to start a new term with the loan principal that you haven’t paid yet. Keep in mind that each new term incurs new fees and interest.
Some states have maximum title loan lengths. For example, here in Texas, the maximum length of any title loan contract is 180 days. A lender could set up a title loan for that length, but the more likely scenario is that a borrower would get a title loan for 30 days, and then extend it five times. Once the 180-day limit is reached, the borrower would need to pay off the full balance on the loan.
How can I find a title loan company in my area?
Although there are plenty of title loan companies out there, it can sometimes by tricky to find the closest one, and you definitely don’t want to end up driving a long distance just so you can pick up your loan.
We can handle the heavy lifting for you there. When you fill out our online title loan application under the Apply heading, we’ll look for title loan companies in your area and connect you with one. You can then go there in person to complete the necessary paperwork and get your money.
Sometimes financial emergencies hit and you need a boost to your wallet without waiting around weeks for a loan application to process. In times like those, it’s nice to be able to pawn your car and still drive. A title loan gives you that option.
It doesn’t matter what kind of credit you have, because title loan companies don’t run credit checks. And you can usually get your title loan the same day you apply for it, or within one business day at most. If you need cash fast, look into your title loan options to see if that's the right choice for you.