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How does a title loan work?

Categories: title loan

So you’re seriously thinking about taking out a title loan. You’ve heard that these loans are a quick way to get some extra cash, and so far it looks like the best option since you need to come up with a couple thousand dollars by the end of the week. But before you nosedive into getting a title loan, here are some answers to a few lingering questions you may have about the title loan process and how these loans work.


Watch how title loans work




What is a title loan?

Rather than using one’s credit score to secure a loan, with a title loan, the borrower uses their vehicle title as collateral in exchange for a loan. In addition to a title loan on a car, some lenders also offer loans up to $15,000 on other vehicles without titles including ATVs, motorcycles, boats, RVs, commercial vehicles, construction equipment, landscaping equipment, logging equipment, and more!


How do title loans work?

Title loans are usually for a 30 day term and borrowers must repay the loan balance in full plus the interest in order to redeem their title. Within the 30 days, the borrower can redeem their title by paying the balance in full or he or she may renew the loan by paying at least the minimum interest due. The borrower can pay more than the interest due to reduce the principle balance.  This will save you money on future interest, so it is a good idea to pay more than the interest only if you can afford to. If the loan is renewed, the borrower will receive an additional 30 day term and interest will be charged on the remaining principal.


Benefits of a title loan

There are many benefits to getting a secured loan or title loan opposed to opting for a cash advance loan or a pawn loan.

  • You can usually borrow more money and at a lower interest rate than a cash advance or pawn loan. 
  • You keep your car, while with a pawn loan you have to leave your collateral in the pawn shop’s possession. 
  • Get same day approval and walk out with the cash you need in often less than 30 minutes.
  • Additionally, title loans are not credit based loans, so if you have bad credit or no credit, then that will not be a problem when applying for this type of loan option. 
  • It also will not impact your credit score if you can’t make your payment on time, or even worse, if you can’t pay the loan back at all.  Your credit standing with the lender will be affected, but not your credit score at the credit bureau.


Drawbacks of a title loan

You are putting up your car as collateral for a loan even though you are only leaving your title with the lender.  So, just like at a bank or credit union, if you don’t pay your loan back as you agreed in your contract, the lender will most likely repossess your car.  This is why it is important to contact the lender if you are going to be late making your payment.  They will usually work with you if you are open and honest with them about your situation.  It is best to be sure you can make the payments on time before you even take out the loan.


Read What happens if I default on my car title loan to learn more. 


State requirements

The loan limit and requirements may vary depending on your state of residence. For example, in Mississippi, there is a fixed state regulated rate on title loans so the loan can not exceed $2,500. In Alabama however, that is not the case as some lenders may offer up to $15,000 while others may offer up to $20,000 on title loans with varying rates.


How to get approved?

When you’re ready to get started with a title loan, you’ll need to bring the following required items and complete a brief application with your lender. Loan approval and amount are subject to meeting the company’s underwriting requirements and may vary depending on your collateral and ability to repay.

  • Vehicle in driving condition and a spare key
  • A title free and clear of any liens
  • Proof of insurance (for loan amount $3,000 or above)
  • Proof of income (most recent paycheck stub)
  • Proof of residence (utility bill, rent receipt or pay stub)
  • SSN verification (or ITIN verification)
  • A valid government-issued photo ID


For over 20 years, Always Money Finance has been a regional leader in providing affordable short-term credit solutions to customers across the southeast looking for a convenient and confidential way to meet their needs. If you’re in a jam and need immediate help, any of Always Money’s small personal loans may be just what you need to get you going in the right direction. If you have questions about auto title loans visit or call 855-GO-ALWAYS(462-5929) for the help you need today.

If you want to have an idea of how much you could borrow with a title loan, use this loan calculator here


To get started,

  • Visit a store near you (Click here to find the store nearest you), 
  • Call 1-888-618-9217 to get pre-approved over the phone, or
  • Apply Online Now!
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