You can find online car title loans that don’t require a physical car inspection. However, you will need to hold a lien-free title to the car and provide photos and many other details about the car so that online title loan lenders can do a “virtual” vehicle appraisal to determine the vehicle value before agreeing to lend you the money.
In the event of an emergency, you may find yourself needing to get your hands on some quick cash. You have a number of options to do so, and car title loans that don’t require the car to be physically present are one way to accomplish that goal.
However, you should be aware that there are some drawbacks to car title loans, such as higher than average interest rates (as compared to other loans) and very short loan terms. In this article, we’ll take a look at when it might make sense to get a car title loan or if another option, such as a personal loan, is a better choice for you.
How title loans that don’t require the car present work
There are many financial institutions that offer car title loans where you will need to get an in-person vehicle inspection to appraise the car. After all, one of the key title loan requirements is the vehicle itself. Having said that, you can find an online title loan company that will give you a title loan without having the car physically present.
These types of online title loans do, however, require evidence that the car is yours and is in reasonably good shape. A car-title secured loan, by definition, means you need to hand over the lien-free title to the lender in order to borrow money. A lien-free vehicle means no one else has any financial claim on the car.
The vehicle also needs to be in decent condition because, if you can’t repay the loan, the title loan lender must be able to recoup the money you borrowed by selling the car. You can improve your loan approval chances by providing clear and accurate pictures of the inside and outside of the vehicle, plus the vehicle identification number (VIN) label. Ideally, you want to make the car look as nice as possible to get the loan amount you need.
Vehicle title loan amounts
Depending on how much cash you need to borrow, auto title loans come in all sizes. You could request a loan from $100 up to $10,000 or more. Of course, the maximum loan amount you can get approved for is directly related to the car’s worth.
If you drive a 20-year-old rust bucket, you probably won’t be able to borrow $5,000, for example. With that in mind, a newer model car will have a higher maximum loan amount. In general, online title loans will allow you to borrow anywhere from 25% to 50% of the equity you have in your car.
Car title loan terms
Car title loans usually need to be repaid in 30 days with interest. Typically, you pay 25% of the loan amount on top of the amount you originally borrowed, although that can vary by lender. That might not sound so horrible on the face of it — you borrow $200 and pay back $250.
However, that amounts to an annual percentage rate (APR) of around 300%. That is certainly not a competitive interest rate in the lending world. Even credit cards for bad credit give you a much better deal than that.
According to the Consumer Finance Protection Bureau (CFPB), 20% of car title loan borrowers have their cars repossessed for non-payment. Furthermore, car title lenders make most of their money from borrowers who repeatedly take out new loans to cover their old ones.
Each time you “rollover” that title loan, you’re charged interest again, which means you could quickly owe more in fees than the original amount you needed to borrow. This is not dissimilar to payday loans.
Who can get car title loans?
Pretty much anyone can get online title loans that don’t require the car to have an in-person inspection as long as they actually own a vehicle and can prove it. But it’s important to know that they are specifically marketed to people with bad or no credit who may not be able to borrow money by other means.
These lenders also tout online title loans as being a way to get “hassle-free cash” right away, especially in an emergency. The issue with these promises is that, just like with payday loans, you can find yourself in a vicious debt cycle if you can’t repay the loan on time and need to get an extension. Plus, even worse than a payday loan, an online title loan can result in the loss of your vehicle.
How to apply for title loans that don’t require the car
In general, the qualifications needed to get approved for a car title loan without the car being physically present are pretty straightforward. You need to:
- Be at least 18 years of age
- Fill out an application (often you can apply online)
- Have possession of the title to your car
- Have valid, government-issued identification
- Provide detailed photos of the vehicle — such as car, truck, or motorcycle — including the VIN label
In some cases, you might need proof of income, but sometimes there will be no credit check or other history needed. If you do have to show your income, you can provide W-2s, pay stubs, proof of unemployment or alimony income, or evidence of self-employment through bank statements from your business account, for example.
If you’re approved for the title loan, you can usually have the loan proceeds deposited in your bank account within a matter of hours or the next business day, after handing over your title. The title loan lender will keep the car’s title until you repay the loan in full plus interest.
Pros and cons of car title loans
Though this type of car title loan is one option to get cash quickly, it comes with significant risks that you must consider beforehand.
Here is a list of the benefits and the drawbacks to consider.
- Get money fast by using your vehicle as collateral
- Bad credit or no credit is not a problem
- Extremely high interest rates
- Very short repayment period
- Potential for an ongoing debt cycle if you need to rollover the original loan
- The potential to lose an important asset — your car — if you fail to repay the loan
The bottom line? Just because you can get a title loan doesn’t mean you should. A one-time emergency situation might be fine, but title loans should not be considered a long-term financial solution. If you can improve your credit record, other lending sources are smarter decisions for the future.
Personal loans vs. auto title loans
As mentioned, a car title loan is a high-interest loan with a very short repayment period — typically 30 days. A personal loan, on the other hand, comes with lower interest rates and a much longer loan term.
A fixed interest rate and six months or more to repay the personal loan results in manageable monthly payments and is a more sound strategy to relieve your financial needs. That being said, you’ll often need to demonstrate a good credit history, sufficient income, and a low debt-to-income ratio (DTI) (though there are personal loans for bad credit).
As part of the approval process, you will also typically have to provide bank statements, W-2s, or other proof of income in addition to showing good credit. The better your credit record, DTI, and income level, the more favorable interest rates and loan terms you can be approved for.
If your financial need isn’t a dire emergency, and you think you can qualify, your best and safest option is to apply for a personal loan. Check out SuperMoney’s list of personal loans to get a better idea of the interest rate and loan terms you may qualify for with your credit score. For instance, the personal loan terms below are for an applicant with a credit score of 650.
Can you get a loan on a non-running car?
You probably can’t get a title loan on a car whose next stop is the junkyard. However, if you have a classic or antique car that’s worth a lot of money, even if it isn’t currently running, you might still be able to get a vehicle title loan.
In that case, though, you probably need to provide some pretty compelling evidence that the car is worth enough to justify taking out a loan against it. In the event of non-payment, title loan lenders want to know they can get their money back by selling your vehicle.
Can I get a title loan if I haven’t paid off my car yet?
That depends. Most of the time an auto loan lender will hold onto the title until you’ve paid the car in full. In that case, if you don’t have possession of the title, you can’t get the title loan. In other instances, you may still be paying off the car, but have the title.
If you do have the title, you could potentially borrow against the equity you’ve built up in the car. For example, if you have $10,000 equity in the vehicle, you might be eligible to borrow up to $5,000.
Do title loans help build credit?
Car title loans are not a way to improve your credit score. An auto title loan lender does not report your timely payments to credit agencies, so there won’t be a credit boost for fulfilling the terms of the loan. Title loan lenders will also probably not report you if you don’t repay the loan, but they will repossess your car to recoup their losses.
Having said that, if you have misrepresented your vehicle’s worth, failed to give up the car after non-payment, or otherwise provided false information, the title loan lender may refer your debt to a debt collection agency. If that happens, it will go on your credit report and negatively impact your credit score. That will severely hurt your chances to get a loan at another time.
- Car title loans are secured loans that allow people with bad credit, no credit, or low income to borrow money using their car as collateral.
- Most title loan lenders require an in-person vehicle inspection, but there are some title loans that don’t require the car to be present to make a loan agreement.
- Vehicle owners seeking car title loans without a vehicle inspection will need to provide a lien-free title, clear and accurate pictures, and other details about the car before they can get a title loan.
- A car-title secured loan is much like a payday loan in terms of high interest rates and short loan terms, except that payday loans are unsecured. A title loan means you could lose your vehicle.
- If you can qualify for a personal loan, it’s a much safer and less costly option than a car title loan and comes with a fixed interest rate, longer loan terms, and more manageable monthly payments.
View Article Sources
- Car Title Loans — Consumer.gov
- Plan to shop for your auto loan — Consumer Financial Protection Bureau
- Pros and Cons of Auto Title Loans (Updated 2022) — SuperMoney
- How to Get an Auto Title Loan Without a Clear Title — SuperMoney
- Fast Auto Loans: The 3 Fastest Auto Pawn Lenders in the Business — SuperMoney
- Auto Pawn Loans: The Ultimate Guide to Car Pawn Shops — SuperMoney
- Ultimate Guide to Auto Equity Loans — SuperMoney
- 2020 Auto Loan Industry Study — SuperMoney
- Speedy Cash Auto Title Loans — SuperMoney
- ACE Cash Express Title Loans — SuperMoney
- Check Into Cash Title Loans — SuperMoney