A common question for those considering a car title loan is “How much can I borrow with a Title Loan”? The answer, however, is not a simple one sentence. The fact is that there are several variables that effect how much you can borrow with a title loan. This makes every loan different and every situation unique.
The factors that determine how much you can borrow include the vehicle used to secure the loan, the state where the loan is initiated, the lender’s own limitations, and your ability to repay the loan.
Variables that Determine how much you can Borrow with a Title Loan:
There are several items that contribute to how much you can borrow with a title loan. The first of several variables that affect how much you can borrow is the vehicle value. The rest are summarized below:
- Vehicle Value
- State regulations
- Lender limits
- Ability to Repay
- Online vs In-Person
We describe each of these factors and how they affect how much you can borrow with a title loan in the following sections.
1. Vehicle Value Factor
Car title loans are secured loans. This makes the value of the vehicle securing the loan a key consideration. In fact, in many cases, the vehicle value will be the driving factor that determines the maximum title loan amount.
In most cases the title loan amount is limited to 50% of the vehicle value. This makes accurately assessing the value of the vehicle, or the appraisal, an important step.
There are considerations that need to be made for both online and in-person appraisals that we discuss below.
2. State Regulations
Car title loans are regulated at the state level. Each state has different maximum loan amounts. Be sure to check the title loan laws in your state to find out if there is a limit.
Some states have limits based on a specific dollar amount, others do not. Some states base the maximum loan amount on a percentage of the vehicle value. Usually it is 50%.
3. Lender Limits
Another factor which may dictate the amount you can borrow with a title loan is the lender. Some lenders, particularly online lenders, have maximum title loan amounts.
In some cases this amount may be quite low; and in others the limit may be the same as the state limit. Be sure to check with your lender of choice to find out how much you can borrow with a title loan.
In addition to lender maximums, some lenders also have minimums. This is often the case for title loans in California. Loans under $2500 in California have specific interest rate caps, so many California title loan companies require borrowers to have a minimum loan amount of $2501.
4. Ability to Repay
Some lenders will require proof of income. Regardless of whether the lender requires this, you should be sure you can repay the loan without question.
As a secured loan, missing payments on a car title loan can result in defaulting on the loan. Defaulting on a title loan can result in repossession.
While it is possible to get a title loan without income verification, this is not the same as no ability to repay the loan. You should always have a way to repay any title loan.
5. Online versus In-Person
A final consideration is the difference between an online vehicle appraisal and an in person appraisal. Generally, an in person appraisal may result in a more accurate vehicle value.
Online title loans without a vehicle inspection use a virtual appraisal instead of a physical appraisal. This can, in many cases, result in a lower value. Title loans without the vehicle mean the lender does not get a chance to physically inspect the car which may result in a lower appraisal value.
In cases where you need to borrow the maximum allowable amount and need the vehicle value to support this, you may want to keep this in mind.
How much can you borrow with a title loan? Unfortunately there is no simple answer as discussed. The real answer to how much you can borrow with a title loan depends on the vehicle, state, lender, and ability to repay the loan.
Once you have all of these defined you can determine how much you can borrow. Generally, it is up to 50% of the vehicle value. This assumes that amount falls within the state and lender limits. Don’t forget to consider how much title loans cost before making the decision to borrow the max.