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If you need to borrow money and you already own a vehicle, you might be able to take out a car title loan. However, while a car title loan might get you some quick cash, there are significant downsides to keep in mind.
Here’s what you should know about car title loans:
- What is a car title loan?
- Drawbacks of car title loans
- Personal loans vs. car title loans
- Personal loans with same- or next-day deposits
- Other alternatives to title loans
What is a car title loan?
A car title loan is a type of short-term, secured loan that typically doesn’t require a credit check. Some lenders don’t even require income verification.
To take out a title loan, you’ll give the lender the title of your car (or motorcycle), and your vehicle will serve as collateral.
In return, the lender will give you a small loan that you’ll have to repay in a short amount of time — often within 30 days.
Drawbacks of car title loans
While car title loans could get you access to some fast cash, they also come with significant drawbacks. Here are a few to keep in mind:
- They’re extremely expensive. Car title loans can have APRs of 300% or higher — far more than you’d pay with other forms of credit.
- They come with very short terms. Car title loans typically have to be repaid quickly. — within 30 days in most cases. If you can’t repay the loan in time, most lenders will let you roll the debt over into a new loan. But rolling the loan over means paying more fees and interest on top of the amount you initially borrowed — digging you deeper into debt.
- You could lose your car. Your vehicle secures a car title loan. If you fall behind on your payments, the lender could seize your vehicle and sell it — meaning you’ll lose your primary mode of transportation.
Learn More: Short-Term Loans
Personal loans vs. car title loans
If you need money quickly, a personal loan could be a smart alternative to a car title loan.
Unlike car title loans, most personal loans are unsecured, so there’s no risk of losing your car. Personal loans also typically have much lower interest rates and fees than car title loans.
Plus, you could also have up to seven years to repay a personal loan, depending on the lender — making your monthly payments more manageable.
If you’re considering a personal loan vs. a car title loan, here are several points to keep in mind:
|Loan amounts||$600 to $100,000|
(with Credible partner lenders)
|Typically $100 to $5,500|
|Loan terms||1 to 7 years|
(depending on the lender)
|Usually 30 days|
|Interest rates||Varies||Average 300% APR|
|Fees||Might charge origination or other fees|
(depending on the lender)
|Might come with:
|Collateral required?||Typically no||Yes|
|Credit check required?||Yes||No|
|Time to fund||Typically within 7 days||Immediate|
|Where to get||Title loan lenders|
No matter which type of loan you choose, it’s important to consider how much the loan will cost you over time. You can estimate how much you’ll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
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Check Out: Secured Personal Loans
Personal loans with same- or next-day deposits
One of the major attractions of car title loans is that you can often get the money right away.
However, there are also several personal loan lenders that offer same- or next-day funding — meaning you could still get the money you need quickly.
Here are Credible’s partner lenders that offer same-day loans or next-day loans:
|Lender||Fixed rates||Loan amounts||Min. credit score||Time to fund||Cosigners allowed|
|9.95% - 35.99% APR||$2,000 to $35,000**||580||As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)||No|
*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.
|6.49% - 29.99% APR||$5,000 to $35,000||740||Next business day||No|
|5.99% - 29.99% APR||$5,000 to $35,000||600||As soon as 1 - 3 business days after successful verification||No|
|6.99% - 24.99% APR||$2,500 to $35,000||660||Funds can be sent as soon as the next business day after acceptance||No|
|15.49% - 35.99% APR||$2,000 to $25,000||580||As soon as the next business day||No|
|3.99% - 19.99% APR||$5,000 to $100,000||660||As soon as the same business day||Yes|
|18.00% - 35.99% APR||$1,500 to $20,000||None||As soon as the same day, but usually requires a visit to a branch office||Yes|
|6.94% - 35.97% APR||$1,000 to $50,000||580||Within a day of clearing necessary verifications||No|
|8.27% - 35.99% APR4||$1,000 to $50,0005||580||As soon as 1 - 3 business days6||No|
4The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 25.79% and 36 monthly payments of $37 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
5This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the US. Duplicate offers received are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the www.upstart.com website.
Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Loans are not available in West Virginia or Iowa. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5100. The minimum loan amount in GA is $3,100.
6If you accept your loan by 5pm EST (not including weekends or holidays), you will receive your funds the next business day. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and funding in accordance with federal law.
Learn More: No-Credit-Check Personal Loans
Other alternatives to title loans
There are also other alternatives to car title loans available. Here are a few options to consider:
- Credit card cash advance: If you already have a credit card, you might be able to get a credit card cash advance from an ATM or your bank. However, keep in mind that credit card cash advances generally charge higher interest rates than what you pay on purchases. You’ll likely also have to pay a fee for the advance.
- Payday or pawn shop loans: Like car title loans, payday loans and pawn shop loans also typically offer immediate loan funding. But this convenience comes at a high price and should be a last resort. These types of loans can charge 300% to 500% APR and come with very short repayment terms.
- Negotiate with your creditors: If you can’t afford your bills, you might be able to negotiate with your creditors. For example, a utility or credit card company might be willing to extend your due date, temporarily reduce your payments, or put you on a payment plan. It doesn’t hurt to ask to see what your options might be.
- Get a loan from friends or family: While this isn’t an option for everyone, asking your friends or family for a loan could help you cover an emergency expense without paying sky-high interest rates and fees. If you decide to ask for a loan, sit down with your family or friends and come up with a repayment plan and agreement that outlines the loan terms. Be sure to stick to the loan terms so your relationships aren’t strained down the road.
If you decide to take out a personal loan, be sure to consider as many lenders as possible to find the right loan for you.
Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.
About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 4.99-35.99% APR with terms from 12 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 8%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.