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10 Mar 2020   /   0 comments

How Do Title Loans Work?


how do title loans workMost people know the idea of a loan, but there are many other options than just traditional loans… one of them being a car title loan, but some might ask how do title loans work?

First of all, what is a title loan?

Great Question – a car title loan is an arrangement in which the owner of a car leverages the equity within their vehicle to secure a cash loan.

Even if you still owe money on your current vehicle, you can still get a car title loan. Just remember, the more vehicle equity value, the larger the awarded loan amount!

How Do Title Loans Work?

loans for car titlesToday we are going to talk about how do title loans work and hopefully answer any questions you might have!

Loans come in a variety of arrangements ranging from deals between friends and family members to more intricate agreements fraught with fine print and contractual obligations.

It may be a student loan to pay for tuition fees, a loan to purchase a car, or perhaps, a mortgage loan.

Whatever the reason, it is a good idea to familiarize yourself with the various types of loans available and how the title loans work.

TFC Title Loans are conveniently located to make the process simple and easy, so contact us today and see if you qualify!

Car Title Loan Requirements

how does title loans work

We understand that the need for an emergency cash loan does arise from time to time.

For this reason, we have done our very best to streamline the process of securing money in times of desperation. At TFC Title Loans we can help!

We want to make it as easy as possible for you to restabilize your finances and successfully pay off your loan.

Below are a few basic requirements for obtaining car title loans:

  • A free and clear title in your name
  • Vehicle registration and proof of insurance
  • Photos of your vehicle’s exterior and interior
  • A government-recognized ID from the state you are applying
  • Personal references
  • Proof of residency
  • Proof of income

With these basic requirements, you are much closer to securing emergency financing. Note that rather than lending based on credit, we are mostly concerned with the equity value of your car. This circumvents the need for a strong credit score, granting access to loans to those who otherwise might not have had access.

Do Title Loans Affect My Credit Score?

how does title pawn workLet it be known that in most cases, a title loan will not impact your credit score.

Though we do run credit checks in the interest of protecting you, most title loan lenders do not. This is essential to understand how the title loans work …

This check, known as a hard inquiry, typically lowers your credit score by 5 points, we insist that it be done so we can underwrite a title loan that your income and lifestyle can handle. It would negligent of us to lock you into an auto equity loan you cannot afford.

Likewise, most title loan lenders do not report your payments to the credit bureaus. If you are applying for a car title loan, you are probably finding it difficult to secure financing from a more traditional source. Luckily, TFC operates online so finding help is just a call or click away!

In this case, you want credit or loans you do get to count towards your credit score. If you default on your loan, title loan lenders are required to comply with the Fair Debt Collection Practices Act. Let’s learn more about vehicle equity value …

Vehicle Equity Value

how does title pawn work

The most important determining factor considered when applying for car title loans is the equity value of a given vehicle.

As stated above, the larger the vehicle equity value, the larger the amount of cash that can be awarded. Herein lies the beauty of car title loans.

Usually, you can borrow between 25% to 50% of the value of your car. According to the FTC, the average loan amount is $1,500 to $5,500, but some lenders allow you to borrow up to $10,000 or more! Loan terms are typically between 15 and 30 days but can range up to a year.

Learn more at

Loan Options

When taking out a loan, you have an almost endless amount of options. You can apply for open-ended or closed-ended loans – secured and unsecured, short-term and long-term, single-payment loans and installment loans. The list goes on and on. Car title loans, however, are considered collateral loans.

Collateral Loans

Loan collateral, in this case – your car title, is a pledge of property to a lender to how do car title loans worksecure repayment of a loan. The collateral serves as protection for the title loan lender against a borrower’s potential default and can be used to offset the loan if a borrower fails to pay the title loan principal and interest.

Collateral also allows title loan lenders to offer lower interest rates. For example, the APR of an unsecured loan is typically much higher than that of a secured loan.

Whether you had previously heard of a car title loan or not, a quick refresher on the subject benefits anyone who wants to know how do title loans work.

Of course, there are numerous ways one can acquire fast cash, but not all loans are made equal. Many loans come with extortionate interest-rates and impossible loan terms that most cannot keep up with.

The consequence of taking on a loan you cannot handle can range anywhere between a tarnishing of your credit score or repossession of your assets. One might venture to say it is the business of certain lenders to trap unsuspecting borrowers into loans they cannot possibly repay…

Payday Loans, Cash Advance, and Bank Loans

If you have ever visited a payday lender or cash advance store while looking for a loan, you might have had the feeling that you were getting the short end of the stick.

how title loans workOne would be hesitant to sign-off on a loan that seems to be too costly compared to the amount of money being borrowed. Yes, second-chance loans do have a time and place, but still, why should the financially destitute have to suffer even more?

Likewise, if you have ever tried to borrow money from a bank, you know how arduous and rigorous the process can be.

Whether it is the need for a nearly perfect credit score or a full-on background check on you and your spending habits, getting a loan from a bank seems to have so many difficult stipulations you might as well just not bother.

So, where to turn when you need money today?

Borrowing from a Title Loan Lender 

how does a car title loan workWhen you need the speed of payday loans or a cash advance, and the trustworthiness of an established bank, you need a title loan from a trusted lender!

To get a title loan, you need to have equity in your car. You must own the car free and clear, meaning you do not have a loan outstanding in the car. Working similarly to a title pawn, a car title loan could be your solution.

Car Title Loan Repayment Options

how do title pawns workBecause auto title loans are short-term loans, you will need to repay the loan quickly. Therefore, title loans are only to be used in times of real emergency. In some cases, you can extend repayment by “rolling over” the loan. Instead of paying the loan off, you get a brand new loan! This leniency is one of the hallmarks of how do title loans work!

Note that you will have to pay new loan fees every time you do it; some state laws do not allow “rolling over” a loan.

As stated before, the last thing we want to see is you defaulting on your loan. We work with you to make sure you can repay your loan promptly suited to your budget.

Do not hesitate to get in contact with one of our dedicated title loan representatives. We are happy to explain how car title loans work and walk you through the entire process!

Together, we can work out a solution to keep you on track to repay your loan in a way that best serves you!

how do title loans work

Apply Today!

If you own a vehicle with substantial equity value and are looking for a cash loan, do consider TFC Title Loans to be the very best choice. So, apply online today. We hope we have answered the question: how do title loans work? Read more at

Frequently Asked Questions
How do title loans work?

In exchange for cash, you give TFC Title Loans the title to your car until the loan is paid off. Title loans can be appealing because they are fast and easy to get. The application process can take as little as 15 minutes, and you can continue to drive your car!

How much can I get for a title loan on my car?

The amount you can borrow is based on the value of your car or the equity you have in the vehicle. The greater the value, the more cash you can receive. TFC Title Loans will award you the highest monetary value on your vehicle's title.

Are car title loans worth it?

Car title loans are an excellent option for those who need money now. If you can show that you have a reliable source of income and a car worth more than the loan you are requesting, the lender will typically approve your loan application.

How Much Cash Can i Get?

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