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Car Title Loans – How They Work

By MattJones

If you have reached this website you’re likely considering getting a car title loan and are curious how car title loans work.  This article will give you a brief explanation of how they work, what to look for, and the questions you should ask before getting a car title loan.

Car Title Loans – How They Work!

Watch this video and continue reading the article below:


First, let’s make sure you understand a few definitions.  Car title loans can also be called pink slip loans, vehicle title loans, auto title loans, or vehicle collateral loans–just to name a few names.  Once you know all the different types of labels of car title loans lets examine how they can work.

A car title loan works by borrowing against the equity in the vehicle you own in your car, pickup truck, suv, motorcycle, or other vehicle.  The lender, which is generally a bank or finance company, will loan you money based on the equity.

how do car title loans work

Answers to how car title loans work!












The process works as follows.  You call a car title loan lender up and the company will ask the following questions:

  • The mileage on your car, truck, suv, motorcycle, or other type of vehicle – in most cases if you have a vehicle with more than 200,000 miles, unless it is a diesel pickup truck, you will not qualify
  • The brand of your car.
  • The model of your car
  • Your personal monthly income – in California you must have a monthly income of at least $1,200 a month.
  • Your credit score — keep in mind that lenders do not look at your credit score as much as other loans because your vehicle will be used as collateral.
  • Your current employment situation
  • Professional references – such as job, work, etc.
  • Personal references – friends, family members, etc.
  • Do you own the vehicle, or is there a current loan on it.  In some cases you can get a title loan if you have another loan on the vehicle.
  • If you do have a current loan on your car you can sometimes have a title loan replace your loan — but keep in mind that the interest rate is likely to be higher
  • The condition of the vehicle.  If it has been in a serious wreck this can affect how much money you are able to borrow
  • You will need full coverage insurance on your vehicle
  • And a few more things
  • Visit our FAQ for more information and see our success stories.

Let’s dig into the process a bit more to understand things a little bit more.

How do car title loans work in California?

In California, due to state laws set by the California department of business oversight the minimum loan amount you can get a car title loan for is $2,500.  Most lenders, to be on the safe side, will make the minimum loan amount $2,510 or $2,600.  This doesn’t include fees, or other factors when getting the auto title loan, but if you get a loan above $2,500 the interest rate you have can be essentially unlimited.  The interest rate will be determined by the criteria above, and by the competition from other lenders.

Some other common questions you may have:

Car title loans in California – how do they work?

Generally, lenders will give you 2 to 3 years to pay off your loan.  This means that your payments will generally be affordable, however, like any loan–the longer you take to pay it off the more interest you will pay on the loan making the total cost higher.  Also, since the lender will be on your title as the first lien holder, if you do not pay your loan the lender can repossess your vehicle.

In most cases lenders will want to work with you to avoid having to repossess your vehicle, but there may be fees associated with these situations.  You may also have to pay money to get your car out of repossession if it is repossessed.

Generally, auto title loans are an option for people who have poor credit, and who have a financial emergency –but you need to realize that the amount of interest you pay over time can add up to make the loan very expensive.

If you think you need an auto title loan fill out the preliminary application form on this website and a representative from TNL Car title loans will contact you as soon as possible.  Or, call TNL Car title loans at 888-539-4465  TOLL FREE and you can find out within minutes how much you can borrow.  We believe in a no pressure hassle free experience.  Contact us today!



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