If you’re short on cash, you may want to consider applying for a title loan. A title loan is a secured loan that allows you to borrow cash by using the title to your vehicle as collateral. Even though your vehicle is used as collateral, you can continue to use it as you normally would while you pay off your loan. Your lender will either hold onto the title or put a lien on it until your loan has been completely repaid.
Title loans are usually processed faster than traditional personal loans. Plus, they are easier to qualify for than traditional loans, which is why so many people rely on them to get fast cash. If you’re considering this option, you may be wondering whether a title loan will provide enough cash to help you make ends meet. If you’re questioning, “How much can I borrow on a car title loan?”, here’s what you need to know:
How Do Title Loan Companies Determine How Much I Can Borrow?
Title loan amounts can vary from $2,510 to $50,000. This does not mean you will be approved for the maximum amount, though. Your title loan company will take a number of factors into consideration when determining how much you can borrow, including:
- Your Income
- Your Vehicle’s Resale Value
- Your Equity
- Type of Vehicle
- State Laws
Your title loan company will ask you to submit proof of income when you apply for a title loan. Acceptable forms of proof of income may include recent bank statements, pay stubs, or tax returns. Your title loan company needs to see this documentation for two reasons.
First, the title loan company needs to confirm that you have a reliable source of income. You are not eligible for a title loan unless you can provide proof of your income. Second, the lender needs to evaluate your income to determine how much you can afford to repay. This helps the title loan company avoid lending you more than you can repay based on your current income.
In other words, the amount you make could impact how much you are able to borrow if you are approved for a title loan.
Your Vehicle’s Resale Value
Your vehicle is used as collateral to secure your title loan, so the title loan company needs to know how much it is worth before determining how much you can borrow.
The title loan company needs to see your vehicle in order to calculate its resale value. You may be asked to bring your vehicle in for an inspection for this reason. However, some lenders offer more convenient options. For example, a lender may send someone to your home or workplace to make the inspection process more convenient. Some lenders even allow you to submit photos of your vehicle instead of bringing it in for an inspection.
Several factors can impact your car’s resale value, including its make, model, year, mileage, condition, and trim level. You cannot borrow more than the value of your vehicle. In fact, title loan companies typically only allow you to borrow up to a certain percentage of your vehicle’s resale value.
The value of your equity in your vehicle can impact how much you are able to borrow, too.
To calculate your equity, subtract the amount you still owe on your car from your car’s resale value. For example, if your car is worth $15,000 but you owe $5,000 on it, you have $10,000 of equity in your vehicle ($15,000-$5,000=$10,000).
You must have equity in your vehicle to qualify for a title loan. If you owe more on your vehicle than it is worth, you cannot use this vehicle as collateral to secure your title loan.
Furthermore, you cannot borrow more than the value of your equity in your vehicle. You are typically allowed to borrow up to a specific percentage of the value of your equity.
Type of Vehicle
The type of vehicle you use as collateral to secure your title loan could affect how much you are able to borrow.
You can use a wide range of vehicles as collateral for a title loan, including sedans, coupes, SUVs, pickup trucks, RVs, and motorcycles. RVs are typically worth more than other vehicles, so you may be able to borrow more money if you use your RV as collateral instead of your personal vehicle.
On the other hand, many lenders set limits on how much they allow you to borrow if you use a motorcycle as collateral for a title loan. Because of this, you may not be able to borrow as much if you use your motorcycle as collateral instead of your personal vehicle. Keep this in mind when deciding which vehicle you would like to use to secure your title loan.
The state you live in could also impact how much you are able to borrow through a title loan. This is because some states have laws that set minimum and maximum title loan amounts.
For instance, if you live in Illinois, you cannot borrow more than $4,000 or 50% of your monthly income per title loan, whichever is lower. Tennessee has an even lower maximum title loan amount. In this state, you cannot borrow more than $2,500 per title loan. In New Hampshire, however, the maximum title loan limit is $10,000.
Title loan companies must comply with these laws when doing business with residents in these states. If you live in a state with these laws, they could seriously impact how much you are approved to borrow through a title loan.
What Can I Spend My Title Loan Money On?
Some loans include terms that restrict how you spend the money you are borrowing. For example, if you take out a student loan, the money you borrow can only be spent on tuition or other education-related expenses.
Fortunately, there are no restrictions on how you spend the money you borrow through a title loan. You will not need to provide an explanation for why you need the money or what you plan on doing with it. If you are approved, you are free to spend it in any way you see fit. This is one of the many reasons why so many people choose title loans over other types of loans.
How Can I Find Out How Much I Can Borrow Through A Title Loan?
It only takes a few minutes to find out if you are approved for a title loan and if so, how much you can borrow. To request a free quote, call 1-855-713-6522 to speak to a loan specialist directly. You can also fill out the form on our website and wait for a loan specialist to contact you.
During this initial conversation, the loan specialist will ask you to provide some basic information about your vehicle, including its make, model, year, and mileage. Then, the loan specialist will prepare a quote based on the information you provide. Your free quote will tell you if you are approved, how much you can borrow, and at what interest rate.
You’re just one phone call away from getting the cash you need to make ends meet.