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Auto Pawn Loans: The Ultimate Guide to Car Pawn Shops

Last updated 03/15/2024 by

Ben Luthi
When you have an unexpected expense and don’t have the cash to make ends meet, you have several options, even if your credit is in the dumps.
Auto pawn loans are just one option to consider as you try to get things back on track. Not only are you able to bypass the process and unpredictability of applying for a traditional loan, but you can usually get the cash fast.
If you’re considering auto pawn loans, read this guide to make sure it’s the right decision for you.

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What are auto pawn loans?

Auto pawn loans are similar to auto title loans. With a title in hand, you can get a short-term loan based on the value of the car and your ability to pay.
The main difference is that, with many auto pawn loans, the pawn shop keeps your car. That’s not the case with every lender, but it’s more common.
Once the loan is disbursed, you’ll typically have only a few weeks or months to repay the loan. Interest rates on these loans can be high, much higher than if you were to use a credit card or personal loan.
On the flip side, auto pawn loan interest rates are much lower than that of payday loans. The caveat is that you can lose your car if you default, and a payday loan doesn’t typically require collateral.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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How to get an auto pawn loan

Since the amount of your auto pawn loan depends on the value of your car, you’re not going to have much luck trying to pawn your car title online. Rather, you’ll need to visit the car title pawn shop directly.
There, a salesperson will inspect the vehicle to determine its value. This appraisal usually takes just a few minutes. Then, the salesperson will give you an offer based on the value of the car and the pawn shop’s limits.
If you agree, you’ll share your proof of income and proof of residence, if applicable. Pawn shops ask for these because they want to make sure you can make the payments, and they also want to be able to reach you if you default on the loan.
“Once I finished application process, I walked out with a check,” says Shay Simmons, a nurse living in Florida. “There was no waiting period or transfer delays between bank accounts.”

Eligibility requirements

To get an auto pawn loan, you typically need the following:
  • Your car
  • A free-and-clear title to the car that lists you as the owner
  • A government-issued ID
  • Proof of income
  • Proof of residence
Eligible income includes earned income from a job, Social Security, retirement, and other consistent income sources. To qualify for auto pawn loans, you also have to live in a state where they’re offered — they’re illegal in some states.
If you don’t live near pawn shops that take car titles, you may have to look to other options like auto title loans, payday loans, or personal loans for bad credit.

What to watch out for

While auto pawn loans are easy to get, it doesn’t mean they’re in your best interest. Here are some cons to consider.

High interest rates

These loans can often charge interest rates in excess of 100%. Again, that’s much lower than what you’d pay for a payday loan. But if you can manage to get the cash some other way, you might be able to save a lot of money in interest.

You may not get to keep your car

Some auto pawn shops keep possession of your car while you make payments. If you need the car to get to work or for other daily activities, you may want to choose a loan that doesn’t require that you give up your transportation.

You may lose your car completely

Even if the lender doesn’t hold onto your car, it does keep the car title in case you default on your loan. And while the loan is always less than the value of the car, you don’t get to keep the difference. So, if you default on a $2,000 loan and your car is worth $5,000, you don’t get the remaining $3,000.

Other alternatives to consider

If you need cash now, auto pawn loans aren’t the only option to consider. “When I pawned my car for a loan, I didn’t know what I was getting myself into,” says Simmons. “I wish I had taken the time to research it before to see if I could get the money another way.”
Here are just a few other alternatives to look into before you head to the pawn shop.

Borrowing from family

If there’s someone in your family or circle of friends who is willing to spot you the cash, don’t be too proud to accept the help. Even if they charge you interest, you’re likely not going to pay as much as you would with one of the loans mentioned above.

Personal loans for bad credit

There are lenders out there who specialize in lending to people with less-than-stellar credit. Check out several lenders to see which ones offer the best chance of getting approved based on your credit situation.
And if you can get someone to co-sign on the loan with you, you’ll have an even better chance at getting approved for a lower interest rate.
If you’re not sure if you’d qualify for a personal loan with your credit score, check out SuperMoney’s loan offer engine.
With this tool, you can get pre-qualified with multiple lenders at the same time and see what kind of offers they have for you. There’s no hard credit check either, so it won’t damage your credit.

FAQ on Auto Pawn Loans

What are auto pawn loans?

Auto pawn loans are similar to auto title loans. With a title in hand, you can get a short-term loan based on the value of the car and your ability to pay. Another great thing about auto pawn loans is that, unlike traditional pawning, when you use your car to finance an auto loan, you can continue to drive that car while they are paying off the loan.

How to pawn your car title?

Before you can pawn your pink slip for some quick cash, you first have to be qualified to do so. And the interesting thing is that anybody can qualify, provided you have;
  1. A car,
  2. A clear title, and
  3. A few other basic auto pawn required documents.

Can you pawn a car title without insurance?

While your vehicle has a title loan against it, you cannot sell or trade that vehicle. Since a wrecked vehicle is of no value as collateral, the loan company will require insurance to cover any damage the vehicle may sustain until the loan is paid off.

Can I pawn my car without the title?

Without a title, you can’t prove the vehicle’s yours and we have nothing to use as collateral. Therefore, you cannot pawn your car without the title.

Can I pawn my title without the car?

You can qualify for an auto pawn loan without physically taking the car to the lender if you apply for a completely online pawn title loan. However, these are harder to come by and you will still need to own a vehicle and have access to it.

Can you pawn your title if your car is financed?

Yes, you can. Some auto pawn lenders may approve a car pawn loan if you have some equity in your car and you are making regular payments. However, it will be more difficult to find a lender and the pawn loan amounts will be lower.

What are the eligibility requirements for auto pawn loans?

To get an auto pawn loan, you typically need the following:
  1. Your car
  2. A free-and-clear title to the car that lists you as the owner
  3. A government-issued ID
  4. Proof of income
  5. Proof of residence

Should you get an auto pawn loan?

Auto pawn loans are usually an option of last resort when less expensive options are no longer available. It’s wise to consider every avenue before choosing this one. If you do feel like this is the right move, check out the top auto title lenders to see which offer auto pawn loans.
Once you find one in your area, head over to the nearest branch, and start the process. Be sure to read the fine print and double-check the lender’s policy on who keeps the car. If you do this the right way, you’ll be able to get the cash you need without feeling like you were taken advantage of.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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Ben Luthi

Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.

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