Car Title Loans

Car Title Loans

Car title loans are just what the name implies: A loan taken out against the value of your vehicle. They are fairly easy to obtain; loan brokers don’t usually require a credit history (click here for more information) and the loan amount is secured by the vehicle itself. A title loan can usually be obtained in a day or two and they can be a viable short-term solution if you need cash for an emergency. There are several advantages to this type of loan and some things that consumers should be careful of when considering a title loan. Keep reading for everything you need to know about vehicle title loans.

How Does a Car Title Loan Work?

A car title loan is pretty cut and dried. There is usually any number of companies that do title loans in your town and many now do business online. You simply go in and fill out a short loan application. The title loan company will need:

  • Your name, address, and phone number
  • The make, model, and year of the vehicle
  • Mileage
  • Proof of insurance coverage
  • Employment information for the borrower

The loan amount can be as little as $100 in some places and run as high as 75 percent of the KBB resale value of the vehicle in good condition. There can be no outstanding liens or outstanding loans on your vehicle and you may have to surrender your title until the loan is paid off. These are meant to be short-term loans and a typical loan duration is 90 days.

Auto Financing 101Looking for more information about auto financing? Check out this infographic.

What are the Benefits of This Type of Loan?

There are several benefits to this type of financing if the borrower doesn’t abuse the option.

  • They’re fast. Loan approval can take as little as 15 minutes.
  • They’re convenient. You can walk in with your title and get your cash with a minimal amount of hassle, and most towns have multiple lenders to choose from.
  • They don’t require a down-payment or a credit check. The value of your vehicle allows you to gain access to funding you might not have been able to get approved for before.
  • Lower interest rate. Because you’re providing collateral in the form of a vehicle, you’ll often be able to qualify for a lower and more affordable interest rate.

Are There Any Disadvantages to Taking Out a Title Loan?

The disadvantages are less than they used to be since provinces have passed some legislative reforms. Some provinces have placed a cap on the amount of interest a title loan company can charge. There is also legislation as to the maximum loan amount in some jurisdictions, as well as the number of these type of loans consumers can take out within a year. The disadvantages mainly have to do with not understanding the terms of the contract, not making payments in a timely manner, or taking on a loan that you can’t realistically afford.

These disadvantages can be overcome by making sure you read the contract thoroughly and understand the consequences, pay the loan off in the shortest amount of time, and avoiding using this quick and easy financing as a short-term solution to long-term financial problems. The consequences are a pile of debt and the loss of your vehicle. If you are in a cash emergency and use this type of financing as it was intended, a car title loan can be a good source of funding. Just make sure to shop around, read the fine print, and pay it back within the allotted time and you should be okay.

New vs. Used CarsTake a look at this infographic for a comparison of new vs. used cars. 

Looking For The Right Lender?

If you’re considering using your vehicle as collateral to get the financing you need, look no further. Loans Canada can help match you with the right lender who will work with you to create a plan that meets your unique needs. Fill out an application today!

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Posted by in Auto
Caitlin graduated from Dawson College in 2009 and completed her Art History degree from Concordia University in 2013. She started working as a freelance writer for Loans Canada right after University, eventually working her way up to Chief Content Editor. Her work has led to a large expansion of the company’s content department and she manages a staff of talented writers who are passionate about educating Canadian consumers about credit, debt, and all things personal finance. With over five ...


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