Before You Sign the Dotted Line: A Smart Consumer’s Mini-Guide to Car Title Loans

When you need money quickly, it’s often difficult to find great options. Of course, when you don’t need money, everyone is offering you great terms, right? What you need is a reliable source of funds “on demand.” And, while a loan isn’t always the best option, it can be. Here’s how to stay out of trouble, while still getting the loan funds you need.

Gather Up All Of The Documents You Need

This is a loan and, like all loans, you need to have your paperwork in order. First, you need the original vehicle title that shows you have sole ownership over it. If you’re still under a bank loan for the car, forget about it. Most lenders won’t touch you. Why not? Because the loan is secured by the vehicle.

You also need a utility bill or some other proof of residency that matches the name on the title. You’ll need your vehicle’s registration, proof of insurance, and some kind of proof of income – usually a pay stub or bank document showing direct deposit.

You’ll need copies of the ignition keys – this is the form of collateral required to get the loan.

Check All Of The Rates And Fees First

Rates on these types of loans vary according to state and lender. Because you’re taking out a loan against the value of your vehicle, the exact amount you get depends on this value along with any state regulations that limit loans in your state.

According to Montana Capital, a California-based lender, car title loans in Los Angeles may be different from the loans available in North Hollywood which may be different from the loan you get in Helena, Montana. That’s because, while Montana and California have very different laws regarding car title loans, the area where you live even in one state may predispose you to different lender rates.

In Montana, for example, loan principal is capped at $300. Yet, in California, lenders can give you anywhere between $2,000 and $20,000 depending on where you live, the type of vehicle you drive, and your credit.

Fees for the loan vary considerably, too. You may end up paying a high application fee, low app fee, or no fee at all, depending on the lender. Interest rates can also be somewhat high with these types of loans – sometimes 3 times the average cost of a credit card line of credit. However, not all loans are expensive. As with any loan, you will need to shop around for the best rate.

Other Things To Watch Out For

One provision that many borrowers overlook is the grace period provision within the loan. Like any secured loan, car title loans require you to repay the loan on time. However, not all title loans have grace periods. If yours does not, the lender may repossess the vehicle for a single missed payment.

Discuss this provision in your contract before you sign the loan documents. Most lenders are willing to work with you before the loan is finalized. 


If you miss one payment, the late fees may be substantial, so make sure you understand all of the terms and conditions. While most lenders are honest, there are some shady companies within the industry.

Finally, while car title loans sometimes carry an unshakeable stigma, the reality is that these are great loans for a responsible borrower. If you’re financially responsible, or you’re just trying to get back on your feet, a car title loan may be one of your best options. The loan process is relatively uncomplicated compared to some loans, and you typically work with a loan officer who is local and accommodating.

Roy Jameson was a busy automotive salesperson for many years. Now semi-retired, he likes to write articles to help people get on the road and back to life. His helpful posts appear on various websites and blogs today.