Does a car title loan affect your credit?

I took out a car title loan a few weeks ago, but I can’t pay it back on time. I already contacted the lender, and thankfully, they agreed to extend the loan term. Now I’m worried it will destroy my credit score. Do car title loans affect your credit?

Answer
Car title loans are notoriously challenging to repay, but you did the right thing by contacting the lender and asking to extend the loan. The good news is that a car title loan will not affect your credit.
Car title loans are secured loans that use your car as collateral and essentially let you borrow money off the value of your car. Because loan providers can repossess your vehicle if you fail to meet the title loan’s terms, lenders typically do not report the loan progress to any credit bureaus or sell your debt to a collection agency. By not reporting the loan or offloading the debt, your credit score is left untouched. However, car title loans policies and laws vary by lender and state, so ask your loan provider if and when they may report on a loan.
If you are looking for ways to build your credit, consider using a credit card to pay for your car insurance. As long as you pay your monthly credit card bill on time, your credit will improve over time.
And if you want to save money on car insurance, the Jerry app is a good place to start.
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Jack Walsh
Answered on Nov 15, 2021
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