Can you explain how car title loans work?

My grandmother gave me a car when I graduated high school. I recently graduated college with thousands in student loans. I'm not making much money at my minimum wage job. I keep hearing about title loans and think getting one could help me. Can you explain how car title loans work?

Answer
I’m sorry that things have been difficult lately. I hope learning more about title loans will help.
Car title loans work by giving the lender the title of the car in exchange for a short-term loan. A title loan, on average, is only 15 to 30 days with an average interest rate of 25%. Because you exchange your title for a loan, the lender generally puts a lien on your car, giving them the legal grounds to take your vehicle.
Title loans don’t require a credit score or history check, meaning people with no credit or bad credit often opt for these loans. That said, they are considered predatory and illegal in several states.
Since you need help, consider looking into:
  • Rolling Jubilee: A 501c4 non-profit that focuses on canceling debt.
  • Student Debt Crisis: A non-profit with tools to help with student loans.
  • Applicable student debt forgiveness
  • Personal loan from a bank: If you have a lower credit score, consider using a cosigner.
  • PAL: A secured payday loan typically offered by credit unions
Another way you can save money is with the Jerry app. Jerry gathers quotes from top providers like Nationwide and Allstate to help find you the best rate for your car insurance. The average Jerry user saves $879 a year!
Lauren Smith
Answered on Dec 01, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.
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