Title Loan
What Is a Title Loan?
A title loan is a short-term secured loan that uses a vehicle title as collateral.
The borrower retains possession of the vehicle while the lender places a lien on the title.
Title loans are often high-interest and designed for short repayment periods.
Loan amounts are typically based on the vehicle’s value.
Why It Matters
Title loans:
- Provide access to cash using vehicle equity
- Carry high interest rates and fees
- Risk repossession if repayment fails
Because the vehicle serves as collateral, default may result in loss of transportation.
Understanding full repayment obligations is critical before agreeing.
How Title Loan Works
Title loan requires the borrower to provide proof of vehicle ownership.
The lender evaluates the vehicle’s value and issues funds accordingly.
If the borrower fails to repay, the lender may repossess and sell the vehicle to recover the balance.
Title Loan vs. Auto Loan
Title Loan → Short-term, high-cost borrowing against owned vehicle
Auto Loan → Used to purchase vehicle
Purpose and cost structures differ.
FAQs About Title Loans
Can you keep driving the car?
Most lenders allow continued use while payments are current.
Are title loans regulated?
Regulation varies by state.
Can title loans be rolled over?
Some lenders permit extensions that increase total cost.
Related Terms
