Tips on How to Get the Best Deal on Car Title Loan

Car title loan is a type of short-term loan wherein the borrower’s car title is used as a collateral. The term is usually less than 30 days and in case of non-payment, the lender takes ownership of the car and sells it to cover for the amount borrowed.

This seems like a scary deal, but it turns out it is a good way to get a loan even with not-so-good credit. In fact, in 2016, around two million people applied for a car title loan and 80 percent of them opted for a rollover.


Despite the possibility of losing your vehicle and the higher interest you have to pay given the short period, there are still ways you can get the best deal out of this arrangement and make it work on your favor.

Here’s what you can do:

1. Lender must be licensed to operate in your state.

This is the first thing you need to look into when applying for a car title loan.

This type of loan is getting popular and there are individuals who are taking advantage of this. Make sure that your chosen lender is eligible to operate according to your state’s laws and regulations. Ask about their license to operate or check if your chosen lender is among those who are not allowed to operate.

This way, your rights are also protected in case something happens. After all, you don’t want to fall in the hands of illegitimate lenders, right?

2. Know the cars that your chosen lender accepts.

Apparently, not all cars are accepted as collateral. Some lenders impose restrictions such as cars manufactured above year 2000, or mileage not more than 100,000, or accept specific cars only. On the other hand, there are others who are more lenient with their car guidelines.

Before you submit your application for this arrangement, inquire about the restrictions and guidelines imposed by lenders. This will tell whether or not you are qualified to apply for this kind of loan.

Now that you find out the right lender for your needs, it’s time to ask about this next pointer.

3. Understand the application and approval process.

Here’s the good thing about loan application today: you can do it online. Some lenders take the information you submitted as is while there are others who require further verification of information over the phone. This will save you not just time but also money for gas or commute since you don’t have to go directly to the lender’s office. Nonetheless, there are still lenders who prefer physical encounter.

Therefore, it is imperative that you understand the entire process, from application to processing, to repayment. Don’t be afraid to ask about the following as well:

Interest Rate – This is the rate charged on top of the principal amount for the use of lender’s assets. Some lenders charge higher rates, so make sure you check the rates imposed by lenders.

Repayment Penalty – This is the amount imposed for paying the loan either earlier or later than the agreed maturity date. Some lenders allow early repayment of the loan without any fee while others charge a certain amount (plus interest accrued up to the date of payment). Ask about this since it could make or break your deal with a certain lender.

Inspection – It’s not enough that the car you will use for mortgage complied with the guidelines. Lender must visually inspect the vehicle before releasing the loan amount. If this is not done, then consider looking for another lender who is more careful in doing business.

4. Inquire about the available payment options.

The concept of loan is simple: you borrow money from a lender, pay an agreed amount plus interest on a specific day every month, and ensure that your loan is paid come maturity date. No matter how simple it sounds, many borrowers struggle with the second step, which is loan repayment.

When applying for a car title loan, make it a habit to ask about the payment options and methods available. Some lenders prefer direct payment by debiting from your personal account while others require post-dated check, which will be applied upon maturity of the loan.

Go for the payment option that is most convenient for you. For instance, even if the lender prefers post-dated check, this won’t be possible if you don’t have a separate checking account. Opting for the most feasible payment option will assure the lender that the loan will be paid no matter what.

5. Make sure that you still drive the car.

Did you know that some lenders require that the car be impounded with them if you apply for a car title loan? There are even some who place a tracking device on the vehicle to monitor your moves. If that’s the case, you need to look for another lender who doesn’t follow this type of practice.

Keep in mind that you still own the car even if it is used as a collateral. The ownership is still under your name, so the lender must let you keep and use your car without any restrictions.




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Hi, I'm Dale. Some of the things I like to do are box, lift weights, and spend time with my beautiful wife Crystal. I also enjoy watching shows on Netflix or playing video games with my son when I can find some free time.

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