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Title loans are secured loans against the borrower’s vehicle, meaning that your vehicle is declared as collateral. Usually, you will still be able to drive your vehicle, but if you fail to pay your loan back, then it will be seized, which is the case for 1 in 6 title loan borrowers. 


Key Points:


  • A title loan requires you to post your vehicle as collateral against the loan, while a payday loan is unsecured. 
  • Title loans are authorized in 17 US states, such as Texas, Georgia and Illinois.
  • How much you can borrow will depend upon your vehicle’s value.
  • 1 in 6 title loan users lose their vehicles.




The maximum title loan you can secure will depend upon the value of your vehicle. The higher the value, the more you can borrow.

What Is A Title Loan?


Title loans are secured loans against the borrower’s vehicle and are used by 2 million Americans each year, who borrow from one of over 7,700 US car title loan providers. 


Like a payday loan, a title loan is a short-term loan. While you are receiving your title loan, your lender will likely hold your vehicle’s title. Even though you can drive your vehicle, in most cases, it will be in your lender’s name until you repay your debt. For your lender, this acts as a guarantee that they’ll either receive their money back, or receive your car or vehicle. 


Which States Allow Title Loans?


Title loans are currently allowed across 17 states in the US, including Georgia, Idaho, Illinois, Alabama, Arizona, Delaware, Mississippi, Missouri, Nevada, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, New Hampshire and New Mexico. 



Can I Get A Title Loan With Bad Credit?


Yes, in many cases you can still get a title loan if you have bad credit, as long as you own a vehicle. Given that your vehicle acts as an assurance of repayment to your lender, the relevance of your credit score falls. 


Therefore, many title lenders will not carry out credit checks. Even though a credit check may not be carried out, you must still have a repayment plan in mind. Remember, your vehicle is on the line. Your creditor can seize your vehicle if you fail to pay them back; technically it is theirs under the terms of the loan. 


How Much Money Can I Borrow With A Title Loan?


How much you can borrow will depend on the value of your vehicle. Usually, borrowers can secure a loan of between 25% and 50% of their vehicle’s worth. Title loans are offered from as little as $100 to over $10,000. 


What If I Don’t Want A Title Loan?


Maybe you don’t have a vehicle. Maybe you do, but don’t want to risk losing it. That’s understandable, and easy to work around. There are plenty of other financing options. 


If you need fast cash, a payday loan may be the best option for you. Payday loans are short-term, high-interest loans that can provide you with your funds within one day of applying. Unlike the title loans, payday loans are unsecured, so your vehicle cannot be seized – nor can your home. With Capital Bean, you can apply totally online within five minutes. As a broker, we will connect your application with our regulated panel of lenders, and find the best lender for you. While these loans are expensive, they are there to be used if you find yourself at a loose end, and they help 12 million Americans annually. These are designed for unexpected circumstances, such as urgent medical bills and home repairs. 


Alternatively, you could approach a credit union for a loan – but you have to become a member. This is, therefore a slower process, and you can often only secure a small loan. If you’re not pressed for time or large lump sums of cash, this could be a great option for you. 


You could approach a loved one for support, but this could damage relationships. 36% of Americans who have lent cash to a loved one have reported such consequences. 


quick cash

If you need fast cash, and don’t want to risk losing a security, you could apply for a payday loan. Unlike title loans, these are unsecured debts



Is A Title Loan Or A Payday Loan Better For Me?


Title loans and payday loans are best suited to different types of borrowers. For example, a title loan could work well for someone who has a car to use as security and wants to borrow a larger amount than a payday loan would necessarily allow (borrowers able to get loans of $10,000 or more, depending on the value of their vehicle).


Ultimately, the best way to borrow depends on your circumstances and needs. When looking to find the best loan for you, it’s good to explore various options, helping you make a more informed decision on how and where to borrow.


Richard Allan

Richard Allan

Richard Allan is the founder of Capital Bean and a passionate writer about personal finance, budgeting and how to save money at home and work.

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