How to Borrow on a Car Title

Borrowing on a car title is a short-term loan option for those holding a clear title to a vehicle. Loan amounts depend on the fair market value of the vehicle, with a loan period of usually no more than 30 days. During this time lender places a lien on the car, giving them the right to repossess the vehicle in case of default. While there is much debate regarding lender practices and risk factors involved with this type of loan, they can provide an option to those who may not qualify for a loan in any other way.

Instructions

1

Get information. Check to see if your state allows car title lending (See Resources). Not all states allow for these types of loans, while others allow them, but with limitations. Know the laws in your state regarding allowable fees, interest rates and repayment periods before making the decision to apply for a car title loan.

2

Get a fair market estimate for your vehicle. Get an idea of what your vehicle is worth by getting an appraisal in writing from a car dealership. Take the written appraisal with you to your appointment.

3

Investigate individual agencies. Comparison shop, just as you would for any other type of loan. Get answers to questions, such as vehicle appraisal criteria and methods, interest rate, additional fees, loan amounts and payment options. If possible, arrange for the lender to appraise the vehicle before filling out any paperwork.

4

Choose a lender and gather required documentation. If the lender has a website, you may be able to download the application form and fill it out before scheduling an appointment. In addition to the application form and clear vehicle title, information typically required includes an extra set of keys, proof of insurance in an amount acceptable to the lender, proof of income, proof of residence and personal references. Once you have this information, schedule an appointment.

5

Go over all loan paperwork, sign and add the lender as a lien holder to your vehicle title. Read the contract and any additional clauses carefully before signing. Most lenders will make your loan check available immediately or within 24 hours.