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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?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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
- 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!View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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