A title loan uses a vehicle you own as collateral \u2014 whether a car, boat, motorcycle or recreational vehicle \u2014 to secure a cash loan from a lender. Title loans must be paid back over an agreed-upon period, which is usually no longer than a couple of years. <\/p>\n\n\n\n
Title loans are issued by alternative lenders, either in-person or online, rather than credit unions or Canada\u2019s Big Six banks<\/a>.<\/p>\n\n\n\n Generally, to be eligible for a car title loan, you have to own your vehicle outright and it must be fully insured. Your car acts as security for the loan, meaning that if you can\u2019t pay back the loan, the lender can make a legal claim against that asset, and take it from you.<\/p>\n\n\n\n To apply for a car title loan, you must:<\/p>\n\n\n\n In some cases, title loan lenders may also require proof of employment and may conduct an inspection of the vehicle.<\/p>\n\n\n\n The lender is required to set out the amount, payment terms and timeline for the loan, as well as the total cost, including interest, fees and annual percentage rate<\/a>. Car title loans are high-interest loans, as their APRs generally top 30%. This can make them much more expensive than other methods of borrowing money.<\/p>\n\n\n\n Once the loan is approved, the title loan lender will register a lien on the vehicle for the duration of the loan \u2014 usually ranging from a few months to three years. Loan funds will typically be deposited into your account directly or sent via e-transfer. <\/p>\n\n\n\n You will still be able to drive the car while the title loan is in place, but the lender may place a GPS tracker or immobilizing device on the vehicle.<\/p>\n\n\n\n The amount of your title loan ultimately depends on the value of your car, with lenders considering factors like the make, model, odometer reading and age of the vehicle to assess its worth. <\/p>\n\n\n\n Typically, car title loans are only offered on vehicles that are less than eight years old, for a <\/a>maximum of 50% of the car\u2019s value.<\/p>\n\n\n\n While they may be appropriate for some Canadians in select situations, car title loans can be an expensive and risky way to borrow money. If you need to use a car title loan, it can help to be aware of the pros and cons before applying:<\/p>\n\n\n\n Before taking on a high-interest title loans, it is worth exploring options that offer lower fees or interest rates, to see if they can meet your needs, including:<\/p>\n\n\n\n Unsecured personal loan: <\/strong>Depending on your credit score and financial situation, you may be eligible to apply for an unsecured personal loan<\/a> or line of credit. An unsecured loan doesn\u2019t require collateral and may have variable interest rate that move in conjunction with the bank\u2019s prime lending rate \u2014typically lower than credit card interest rates.<\/p>\n\n\n\n Increasing credit card limit: <\/strong>Depending on the amount of money you need, your credit card may provide a cheaper alternative to a car title loan. If you have a history of paying your bills on time, speak to your credit card provider about the possibility of increasing your card limit<\/a>.<\/p>\n\n\n\n Other secured loan (pawn loan): <\/strong>While still considered high-cost credit, pawn loans also have short terms and rarely require a credit check. Exchanging an item other than a vehicle (such as electronics or jewelry) for a short-term loan may be an alternative solution. Unlike with a car title loan, failure to repay a pawn loan will not hurt your credit score.<\/p>\n\n\n\n Cash advance:<\/strong> If you need a small amount of money quickly, a cash advance<\/a> from your credit card company or a payday lender may be an option. Both cash advance options involve high interest rates and possible fees, however, if you anticipate being able to pay the money back in a matter of days or weeks, they help you bridge the gap.<\/p>\n\n\n\n Whether or not a car title loan is reported to credit bureaus depends on the lender, but it isn\u2019t typical. However, if you fail to repay the loan and your car is seized by the lender, it will appear on your credit report and have a negative impact on your credit score.<\/p>\n<\/div><\/div><\/div>\n\n\n\n In some cases, a lender will consider issuing a title loan when a vehicle is almost paid off.\u00a0 But generally, to qualify for a car title loan, you must own your car outright \u2013 and no longer be financing or leasing the vehicle.<\/p>\n<\/div><\/div><\/div>\n<\/div><\/div><\/div>\n<\/div><\/div><\/div>\n\n\n\n Helen Burnett-Nichols is a freelance writer specializing in news and feature articles on a variety of business, legal and investment topics. Her work has appeared in publications such as The…<\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\tRead more about Helen Burnett-Nichols and explore their articles<\/span>\n\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t<\/div>\n<\/div>\n\n\n\n\t A car loan is a way to purchase a new or used vehicle when you lack the cash to buy it outright. Car loans are available from banks and credit unions, as well as online lenders.<\/p>\n\t<\/div>\n\n\t Transferring a car loan is an alternative way of selling your vehicle. Be aware of your lender’s terms, conditions and fees before agreeing to a loan transfer.<\/p>\n\t<\/div>\n\n\t Both a personal line of credit and a car loan can be used to purchase a vehicle, but interest rates, credit limits and total cost may vary.<\/p>\n\t<\/div>\n\n\tTitle loan eligibility requirements<\/h3>\n\n\n\n
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How much money can you get with a car title loan?<\/strong><\/h3>\n\n\n\n
Pros and cons of car title loans<\/strong><\/h2>\n\n\n\n
Pros<\/h4>
Cons<\/h4>
Car title loan alternatives<\/strong><\/h2>\n\n\n\n
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Frequently asked questions about car title loans<\/h3><\/div>
\n\t\t\tAbout the Author\t\t<\/h4>\n\n\t\t\t\t\t
\n\t\t\t\tDIVE EVEN DEEPER\t\t\t<\/h4>\n\t\t\n\t\t
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\t<\/a>\n\t\t\t\n\t\n\t\tHow to Transfer a Car Loan in Canada\t<\/a>\n<\/h4>\n\n\t
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\t<\/a>\n\t\t\t\n\t\n\t\tPersonal Line of Credit vs Car Loan: How to Choose\t<\/a>\n<\/h4>\n\n\t
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