Can I Get a Car Title Loan Without a Clear Title?

Can I Get a Car Title Loan Without a Clear Title?

Written by Veronica Ott
Fact-checked by Caitlin Wood
Last Updated November 18, 2021

A car title is a legal document that provides proof of ownership to a specified vehicle. In addition to the proof of ownership, the car title provides important information about the vehicle, such as the VIN number and the full name and address of the owner. A person can use their car title to secure a loan which is known as a car title loan. Car title loans are known by many names including auto title loans, vehicle title loans, and vehicle collateral loans. You can still use your car for the duration of the loan’s term, but if you default on the loan, your car will be repossessed and sold. The question now becomes, can I get a car title loan without a clear title?

Can I Get A Car Title Loan If My Title Isn’t Clear?

No, unfortunately, you cannot get a car title loan if the car title isn’t clear. You must own your car entirely and have no other liens or obligations against your vehicle if you want to obtain a car title loan. In other words, a lender is not going to risk lending money to someone who doesn’t have a clear car title because, if the borrower defaults on the loan, they are not first in line to recover their money and may not be able to receive any compensation for the money lost.

Is It Possible To Get An Auto Equity Loan Without a Clear Title?

While it’s not possible to get an auto title loan without a clear title, you could potentially get an auto equity loan. While an auto title loan requires you to own the car outright, an auto equity loan allows you to borrow against the equity in your car. Generally speaking, the amount you qualify for will never exceed the equity your own in your car. This form of financing is a good alternative to auto title loans. 

Auto Financing 101
Take a look at this infographic for everything you need to know about auto financing.

Car Title Loan Requirements

One of the great things about title loans is the minimalistic requirements. Most financing forms have a long list of requirements which can make it challenging to get approved. Title loans are a good way to get quick cash without a big hassle.

  • General Requirements. You must be a Canadian citizen or permanent resident and be the age of majority in your province or territory (usually 18 years of age). You’ll also need a piece of government-issued identification and proof of employment status or income.
  • Own a Vehicle. In order to get a title loan, you must own a car or another vehicle, such as a truck, motorcycle, or boat. The vehicle must be worth something otherwise the lender may not be comfortable using it as collateral. Usually, lenders will extend half of what your vehicle’s appraised value is.  
  • Vehicle Title. You must have a vehicle title in your name only to obtain a title loan. Some lenders accept co-owners on a title, but it depends. The title must also be clean and lien-free. This means that other lenders do not have any interests in your car as collateral against an existing loan and you own your car entirely.

Advantages And Disadvantages Of A Car Title Loan

Every form of financing has corresponding pros and cons, title loans are no different. As always, you should be sure to take the time to assess your current financial state and future goals when making any monetary decision.

Advantages

  • No Credit Requirements. Unlike most loans, you do not need to have good credit to get approved. Lenders rely entirely on the car title as collateral for the loan so good credit is not necessary.
  • Relatively Better Rates. Compared to other non-traditional lending option, like payday loans, car title loans tend to have more affordable interest rates. Although, this isn’t always true, be sure to read the fine print.
  • Fast Cash. The approval time is rapid for car title loans. Typically, for in-person car loan applications, you can get approved the same day and for online applications, you can get approved by the next day.

Disadvantages

  • Risk Losing Your Car. If you are unable to repay the loan, the lender has the right to repossess your car and sell it. A car is a necessity and required to earn a living for many people, be sure that you consider this before risking losing your car with a title loan. Some may end up in a worse financial situation if they lose their vehicle.
  • Expensive. Even though title loans have better rates compared to other non-traditional lenders, they are still expensive compared to other types of financing on the market. There may also be costly, applicable fees on top of the already expensive interest.
  • Untrustworthy Lenders. Unfortunately, not all lenders are made equal. Some are more dishonest and disreputable than others, including car title loan lenders. To avoid getting yourself into a bad financial situation, do your research on both the creditor and the terms of the loan.
New vs. Used Cars
Trying to decide between a new car and a used car? This infographic is for you.

Costs To Consider When Getting An Auto Title Loan

There are numerous costs associated with auto title loans. It’s better to familiarize yourself with the costs to better understand if you can afford to pay it. Here are the main factors to consider when calculating the cost of an auto title loan:

  • Interest Rate – Legally auto title lenders can charge you up to 60% annually in Canada. This includes the fees and interest you’d pay for the loan. 
  • Fees – Be aware of all the fees an auto title lender can charge you. Typical fees include car title search fees, administration fees, loan origination fees, registration fees, and vehicle evaluation fees. 
  • Loan Term – Auto title loans have short terms that can range from as little as 3 months to as long as 3 years. While a longer-term loan will result in lower monthly payments, it also leads to more interest paid over the course of the loan. 
  • GPS Fees – Some lenders may charge you a fee to install a GPS device in your car. This is sometimes required by your lender so that if you default on your loan, they’ll have the ability to recoup payments by tracking your car and seizing it.

Alternative Options To An Auto Title Loan When You Have No Title

If you have a car with no title, then you may want to consider some alternative financing options. These are some options you can use if you need cash quickly but have no car title and bad credit.

Personal Loan

Another good alternative to auto title loans is a personal loan. Short-term installment loans can provide you with a similar financing structure in which you’ll have high rates and a short term, but you won’t have to provide collateral. Moreover, like an auto title loan, many short-term personal loan lenders will accept those with bad credit, provided that they meet their other requirements.   

Use Your Home Equity

If you need financing and own a home, consider using a home equity loan. These loans use the equity you have in your home, the total house value minus the amount you owe against the house, as collateral for the loan. These loans typically have lower rates, making them more affordable than an auto title loan.

Payday Loans

Payday loans are another option to auto title loans. Like an auto title loan, these loans are short-term and have very high-interest rates. With a payday loan, you can get up to $1,500, which you must repay by your next payday. These loans typically don’t require a credit check and provide funding within hours. However, due to the high-interest rates and fees, this option should only be used as a last resort. 

Can You Sell A Car With A Loan On It?

Selling a car with a loan on it is possible. If you decide to sell your car with a loan on it, it is important to remember that if payments to the lender stop, the car can still be repossessed, whether it is in your possession or the buyer you sold it to. That’s because the lender will have a lien on the car until the loan has been paid off.

Ways To Sell A Car With A Loan On It

There are two ways you can usually sell a car that still has a loan on it. You can either sell it in a private sale or by trading it in with a car dealership.

  • Private Sale – You can sell your car with a loan on it to a private buyer and then use the profits pay off your lender. You could also first pay off your lender and then sell your car, as many indivualds don’t buy cars that still have a lien on it.
  • Car Dealership – Another way to sell your car that you’re still financing is by trading in your car for another one. You can then roll your current car loan to a new car loan.

Car Title Loan FAQs

Can I get a car title loan if I have bad credit?

Yes, typically, auto title lenders base their approval on other financial factors such as your income, debt and employment stability. Of course, one of the main factors is that you hold the title to your car. 

What should I do if I can’t get approved for a car title loan with an unclear title?

Title loans are commonly used by individuals who are already struggling financially given that good credit is not a requirement for approval. If you were aiming to use a title loan to tackle debt, consider using a debt relief product instead. There are several debt relief products on the market including debt consolidation programs and consolidation loans.

What’s an alternative financing option to cover an emergency cost?

Every now and again life happens and it can be a huge pain and hassle to deal with an emergency cost. Sometimes, in order to cover the cost of an emergency, you will need external financing. If this is the case, consider using an unsecured personal loan.

How do I get a title for a car? 

If you don’t have your car title information, you can contact your local provincial service center to order a copy of it. Depending on the province you live in, the rule may vary slightly. However, you can usually have it mailed to you by filling an online application. 

Final Thoughts

If your car title is clear, Loans Canada can help match you with a title loan lender today. Unfortunately, if your car title isn’t clear, you likely won’t get approved for a title loan. The good news is that there are ample financial products on the market meaning you have options. Loans Canada can help you find the right product today to achieve your financial goals.



Rating of 5/5 based on 3 votes.

Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.

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