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What are Car Title Loans and How Do They Work?

By Joshua Z | May 12 2020

What is a Car Title Loan and How Does it Work?The speed and ease of getting a loan using car title as collateral have gradually become popular, making car title loans the most sort after funding option in times of emergency needs. A car title loan can be the means of escape for individuals in need of cash and who need this cash fast to take care of urgent needs. Most know how car title loans work but what is a car title loan?

Not everybody has gotten access to information about what a title loan is or how it works. Even if you have heard of car title loans or understand how car title loans work, there are still some more things you should know about car title loans. Let’s learn more about how car title loans work and how a car title loan can help your financial situation …

Rather than drown in a financial crisis or outstanding debt, getting a low-interest loan is a better decision in such uncertain times. It is imperative that you are equipped with the necessary details about car title loans and how they work, as well as the requirements you need to qualify and apply for a car title loan online.

Car Title Loans California

If you live in California and are in a situation where you need a short term loan with a high loan amount, a fast car title loan with Car Title Loans California is the way to go!

We understand the needs of our car title loan customers and know that living a good life while keeping a good credit score can be a struggle. Therefore, we provide our clients with top-notch title loan programs to bolster their finances. Your car and its pink slip is your ticket to getting an auto title loan. We are not so much concerned with the condition of your credit score, but the equity value of your vehicle …

How Do Car Title Loans Work in California?

Though your credit will be checked, it is not the most important factor for approval. Car title loans California has been helping people for over 20 years and we are here to help you get the fast emergency money that you need. When you apply for a car title loan with us, you will get the highest possible loan amount, at the best interest rate with no prepayment penalties or hidden fees. As you read through, you will find out a whole lot of things you need to know about title loans and how they work. This article also answers the most common questions people ask about auto equity loans

What Are Car Title Loans and How Does a Title Loan Work?

What Are Car Title Loans and How Does a Title Loan Work?A car title loan, also known as a pink slip loan, auto title loan, title pledge, auto equity loan, title pawn, or car title cash advance, is a short-term, high-interest-rate loan that uses the clear title or equity in your vehicle as collateral. It is a form of credit, and the car title as collateral makes it a secured loan. The lender issuing the auto title loan collects the car owner’s title in exchange for the cash.

Car title loans have become popular in recent times because of how easy it is to get them. They cater to subprime borrowers. They are popular with people who have. Auto title loans are usually short-term loans …

When you compare this auto title loan process to that of traditional lenders like banks and credit unions, you see that they are much easier to qualify. Unlike secured loans from conventional banks and credit organizations, you continue to maintain possession of your car. You maintain possession of your car as long as you stick to the terms and conditions of your car title loan agreement.

Once you receive your car title loan amount, the title lender places a lien on your car or vehicle. Then you sign the terms of agreement indicating the loan repayment period plus the interest rate. Car title loans offer great deals, are more flexible than traditional bank loans, and can get you thousands of dollars of about $2,500 to $50,000!

How do you calculate car title loan interest rates?

how does a title loan workAuto title loans short term loans, usually for 24 to 48 months with high-interest rates and a triple-digit annual percentage rates (APR). This is because car title loans are designed for people with poor credit scores. Therefore, interest rates are much higher than standard bank interest rates or credit union interest rates.

A typical car title loan could have up to a 10% monthly interest rate. On the other hand, the annual percentage rate for that loan might be 120%. The cash advance you qualify for depends on the value of your car. The higher the equity value of your car, the higher the loan amount you may receive. This is how a car title loan works!

After providing information about yourself and your car during the online auto title loan application, a title loan representative will then appraise your car according to the Kelley Blue Book, evaluating the worth of the car to determine the resale value. At the end of the evaluation, the result of the appraisal will determine the maximum amount of money you can borrow from the lender. Car title loans often are for an amount of cash that is about 25% to 85% of the value of the car.

On average, depending on your state of residence and car’s resale value, you can get between $2,500 to $50,000. Whatever brand and model of the car you are using, as long as you are the owner of the car or vehicle or have enough equity in the car, you are assured that you can get a car title cash advance for yourself.

How do car title loans vary from state to state? 

how do car title loans work in CaliforniaWhen it comes to laws and restrictions governing the car title loan industry, it varies from one state to another. Not all states allow auto title loans.  As of August 2012, about 22 states in the US did not permit auto title lending. Only 8 states allowed it, but at lower rates. 16 states allowed auto title lending with three-digit APR, and 4 states permitted auto title lending through a loophole in the law.

According to a report by the New York Times, many US citizens borrow auto title loans yearly. In 2011, the California Finance Lenders Law established legislation that permits licensed companies and organizations to give short-term loans that are secured by car titles or pink slips.

The laws, which differ from state to state, cover specific facets of title loans like car title loan interest rates, administrative fees, and repossession guidelines. These laws according to the Department of Business Oversight in California keep title loan lenders in check at all times. Find out more about car title loans via

How do car title loan terms & conditions work?

Before you sign any title loan document, the car title loan lender must give you the terms of the agreement. They must ensure that you understand every detail in the auto title loan contract before signing. The federal Truth in Lending Act treats car title loans like other funding options – that is, lenders must disclose the cost of the loan to borrowers.

If there are any extra fees or charges like loan processing fees, paperwork fees, late fees, loan origination fees, title charges, lien fees, etc. they must be clearly stated. The annual percentage rate (APR) which depends on the amount you borrow, the title loan interest rate, and any other charges must be indicated to give borrowers a clear picture of what they are signing up for.

How Car Title Loans Work

How Car Title Loans WorkSo, what is a title loan, and how do car title loans work? If you own a car with substantial vehicle equity, you can get an auto title loan. It is quick and easy to get a car title loan with us. Your car, truck, RV, etc. can be a lifesaver in a time of critical financial need.

Your car title or pink slip serves as collateral when you take a car title loan. This title document is what indicates your ownership of the vehicle and is what you must provide the car title loan lender when you apply for an auto title loan. This is how a car title loan works …

When applying for a car title loan, you must first approach an auto title loan company with your vehicle and a pink slip. The title loan lender will then inspect your car to ensure it is in good shape. This inspection process is what helps your lender gather specific data about your car to come up with a loan amount that suits the value of your car. Then the lender will place a lien on it, and hands over the cash loan to you.

After you approach an auto title loan company for a loan and your car has been appraised, a title loan officer will guide you through the rest of the loan approval process. You can get financial assistance on the same day that you apply.

What are the documents required for a car title loan?

You will be asked to present proof of income, proof of residence, photos of your car, and personal references. Your lender may also need to contact your insurance agent.

Because you are using your car title as collateral for the loan, a vehicle inspection is a way of ensuring that you receive the maximum loan amount based on the equity value of your vehicle. A car or vehicle inspection may reveal a higher value, hence, qualifying you for more cash!

We will assess the equity value of your vehicle and let you borrow a certain percentage of the overall value. This percentage is calculated by an auto title loan calculator. Now you know what are car title loans.

There are no prepayment penalties or hidden fees! The loan repayment period is usually short. Contrary to popular belief, you can still drive your car while you pay off the loan. You get your car title back when you pay the title loan in full …

Getting a car title loan in California is as easy as 1, 2, 3:

  • Apply online for a car title loan
  • Submit the required documents for car title loans
  • Receive loan approval and direct deposit your cash!

Although auto title loans are short-term loans, you can negotiate the loan repayment schedule with your lender. While car title loan lenders may offer you an extended loan payment plan, others may not. We work with you to pay off the loan in time by making larger payments each month.

How to successfully repay your car title loan

car title loans how do they workWhile some lenders may allow you to pay more each month to complete payments before time, other lenders may not. Some lenders may allow you to make payments for a longer period, others may not.

It is up to you to decide which payment option is best. Either you pay directly to the title loan office in person, or through an online system by direct deposit. You could also choose to subscribe to an automated payment system.

We work to reach a payment plan and payment option for your convenience. Therefore, your title loan doesn’t put you under undue pressure. This is why we stand out as the best title loan company in California!


how do car title loans work in californiaRoll-Overs: You will be allowed to roll over the loan amount if you cannot pay it off within the stipulated time. But remember! Each time you rollover your loan, you do so at a higher interest rate!

For example: if you take a loan for $1,000 to pay back $1,250 at the end of the loan period but you only managed to pay $250. The remaining amount will be rolled over to a new loan …

This will attract a much higher interest rate to cover the high risk undertaken by the auto title loan agency. Leaving you in the debt cycle, and even at the risk of losing your car through repossession.

Car Title Loans California will work with you all the way. We permit rollovers, and we also ensure you are well assisted and supported to meet up with your payments. We even offer car title loan buyouts!

Loan default

It is possible to default on an auto title loan. A situation where a borrower fails to follow through on the agreed-upon terms and conditions is called loan default …

When someone defaults on a loan, an auto title loan agency may attempt to restructure a payment plan. Together, you and your lender can work to avoid car repossession.


When someone defaults on their loan, they run the risk of having their car repossessed. The car title loan lender may decide to contact the borrower or they might immediately repossess the car. There are also laws that govern repossession. Nevertheless, the lender is legally permitted to auction your car to recover the loan amount.

Apply for A Car Title Loan

You apply for a car title loan over the phone, online, or in person. After you submit your loan application, we will off you a loan amount suited to the equity value of your vehicle. We will then proceed with a credit check using Experian. We will also have to verify your monthly income.