A car title loan can be a fast way to get cash when you have bad credit, but they also can come with disadvantages like high rates, short terms, and the risk of losing your vehicle if you default.
If you’ve been thinking about using your vehicle as collateral for a loan, you may have heard of TitleMax loans. While TitleMax offers secured and unsecured financial products, they are most well known for their title loans.
Here, you will learn more about TitleMax, how title loans work, and what other financial options you have available.
TitleMax Loans: Are They The Best Choice?
Is a TitleMax loan the best option for you? TitleMax currently advertises several financial products, including:
- Car title loans
- Car title pawns
- Motorcycle title loans
- Motorcycle title pawns
- Unsecured personal loans
These options may seem like the best choice if you’re in need of fast cash and have a low credit score. But it’s also important to remember the risks associated with each of them.
Finding The Right Personal Loan
Some steps to take that may help you on your journey toward finding the right personal loans are:
- Check your credit score first – Knowing your current credit rating will help guide you toward lenders who may be a good fit for you and help weed out other lenders who wouldn’t be a good match.
- Shop around and compare offers – After you know what your credit score is, do some research on the different lenders available. See what kind of loan amounts, payment terms, and interest rates various lenders offer. It may even be a good idea to check out online reviews to see what kind of experience other borrowers had with a particular lender.
- Review your current debt – Take inventory of your existing debts and financial obligations. If you currently owe quite a bit in debt or have little spare room in your budget, you may want to reconsider applying for a loan until you can get your finances back on track.
- Get a financial plan – If you decide that applying for a loan is the right choice, have a general financial plan. How long do you want to take to pay back your loan? How much do you want to borrow? What exactly are you looking to pay for with your loan? What is the most you can afford as a monthly payment?
Taking these easy steps prior to applying for a loan will help you find the right kind of loan that may work well for you and your current financial situation.
Unsecured vs. Secured Loans
Loans can typically be broken up into two categories:
- Secured loans
- Unsecured loans
Secured loans are loans that require collateral in order to receive approval. When a borrower uses collateral for a loan, they use the value of a piece of property as proof that they have the means to repay their loan. If the borrower pays back their loan on schedule and sticks to their repayment terms, their collateral will remain unaffected. However, if the borrower defaults on their loan, they risk having whatever property they used as collateral being repossessed by their lender. Some common examples of secured loans are:
- Home equity loan – Uses the borrower’s home or real estate property as collateral.
- Title loans – Uses the borrower’s vehicle title as collateral.
Unsecured loans are loans that do not require collateral. When borrowers don’t use collateral to secure a loan, the lender will look at their financial history and income to see if they can repay their loan. This is why borrowers with a bad credit history or an extremely low income can sometimes have a hard time finding approval for unsecured personal loans.
What You Need to Know About TitleMax Loans
TitleMax is a title loan company that currently operates in the following states:
- Arizona
- Delaware
- Idaho
- Kansas
- Missouri
- Mississippi
- South Carolina
- Tennessee
- Texas
- Utah
- Wisconsin
TitleMax has a few rules and stipulations regarding their title loan products, secured line of credit products, and title pawn products. Those rules include:
- Maximum loan amounts in Mississippi caps at $2,500.
- Maximum loan amount in Tennessee caps at $6,500 (assuming the borrower receives and accepts the max pledge of $2,500 for a loan and $4,000 for a line of credit.)
- Refinancing is not available in Nevada, Mississippi, or Tennessee.
- Minimum loan amount in South Carolina begins at $601.
- Borrowers must be at least 18 years or older. In Alabama, the minimum age is 19. This means you may not be able to get a loan on your own if you are 17.
- Proof of income and ability to repay analysis is required in Missouri, Nevada, and some Texas locations, and Utah.
Approval Requirements
Regardless of what type of financial product you decide to apply for, TitleMax has a few core approval requirements. Those requirements include:
- A valid government-issued ID, such as a driver’s license
- Credit inquiry
- Sometimes, a bank account is required for direct deposit
If you are looking into a motorcycle title loan or title pawn, you may be subject to a motor vehicle inspection and appraisal, where a representative will review the condition of the title and vehicle. Furthermore, borrowers who are utilizing a secured line of credit are subject to periodic collateral review. This means the lender may want to periodically check on the condition of your vehicle to confirm it’s still in a similar condition to when you first received your loan.
Below is more information on the financial products offered by TitleMax.
Car Title Loans
Car title loans are by far the most popular financial product offered by TitleMax. With the car title loan process, borrowers use their lien-free vehicle title as collateral to secure their funding. During the initial approval process, the title lender will inspect and ultimately determine the value of the borrower’s car, which will play a major role in how much fast cash they may be able to get from a title loan.
Usually, when you get a title loan, the lender allows you to keep your car to drive like normal while you pay back your balance. However, should you miss a certain amount of payment or default on the loan, the lender has the right to repossess your vehicle.
Car Title Pawns
A car title pawn works similarly to a regular title loan in that the borrower must use their vehicle’s title as collateral. However, with a title pawn, the borrower must usually leave their vehicle in the possession of the lender while they pay back their loan.
Motorcycle Title Loan
Motorcycle title loans work similarly to a regular car title loan, except the vehicle being used as collateral is a motorcycle instead of an automobile.
Motorcycle Title Pawn
Similar to car title loans, borrowers may also pawn their motorcycle title with the help of TitleMax. Just like a car title pawn, borrowers may be required to leave their motorcycle with the lender while they pay back their loan.
Unsecured Personal Loans
Lastly, TitleMax also advertises unsecured personal loans. While unsecured personal installment loans do not require collateral, they may come with higher interest rates and lower funding amounts depending on your credit score.
What Are Some Alternatives to Auto Title Loans?
Some other loan options besides title loans include:
- Personal installment loan
- Payday loans
- Payday cash advance
- Credit union loans
- Local bank loans
CreditNinja: How Does It Compare?
CreditNinja offers personal installment loans to help borrowers with all types of credit find the financial assistance they need. Personal installment loans usually fall under the category of short-term loans and can be used for a variety of purposes. Furthermore, CreditNinja personal loans can also come with advantages such as:
- Flexible loan terms
- Fast approval process
- Affordable monthly payment
- Competitive interest rate
How Does the CreditNinja Funding Process Work?
Loan approval with CreditNinja was designed to be fast and easy. Here’s how it works:
- Complete an online application. Our loan application can take just a few minutes to complete depending on the information you have on hand.
- Receive an approval decision. After completing your application, you should receive a prompt answer regarding your approval status.
- Get your money! Upon approval, CreditNinja will use direct deposit to deliver your loan funds into your bank account.
How Will a Personal Loan Affect My Credit Score?
Just like any loan, a CreditNinja personal loan has the ability to affect your credit score. While late payments or default will lead to a decline in credit, it’s also possible to boost your credit score with a personal loan! Making payments on time and eventually paying off your balance may cause your credit score to increase the next time you request a credit check!
Below is more information on the details that make up consumer credit scores:
| Factors Affecting Credit Score | Percentage | Description |
| Payment History | 35% | This is the most important factor. It reflects whether you’ve paid past credit accounts in a timely manner. |
| Amounts Owed | 30% | This reflects how much of your available credit you’re using. High utilization can indicate risk. |
| Length of Credit History | 15% | This considers the age of your oldest account, the age of your newest account, and an average age of all your accounts. |
| Credit Mix | 10% | This considers your mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. |
| New Credit | 10% | This reflects the number of recently opened accounts. Opening several accounts in a short time can indicate risk. |
Who Are CreditNinja Personal Loans For?
CreditNinja knows it can be difficult to find fast approval for an affordable loan when you have a less-than-perfect credit score. That’s why we strive to provide fast and affordable installment loans to all consumers in need, regardless of credit! CreditNinja encourages people with all types of credit scores to apply for our installment loans if they’re going through a financial emergency.
FAQ: TitleMax Loans
The amount of funding you may be able to get with TitleMax will depend on the value of your vehicle if you are seeking out title loans or title pawns. If you are seeking out an unsecured personal loan, funding amounts may vary depending on your financial history.
Interest rates for loans with TitleMax may vary depending on the loan type, financial history, as well as the state you live in.
It can take anywhere from a few minutes to several business days to receive funding from a lender.
According to the Federal Trade Commission, title loans can come with monthly finance fees reaching 25%; this comes out to an APR of about 300%. This is more than 14 times more than the average credit card APR, which was reported to be approximately 21% at the beginning of 2023.1
Unfortunately, the default rate for loans such as a title loan is quite high. In fact, according to the Consumer Financial Protection Bureau, about one in five auto title loan borrowers have had their vehicle seized due to failure to repay their debt.2
The total cost of a TitleMax loan will depend upon factors like the total borrowing amount, interest rates, and repayment terms.
Ultimately, the lender decides the interest rate for a loan. Factors that may influence interest rates are credit history, income, and ability to repay the loan.
Repayment terms for loans with TitleMax can vary depending on the loan type as well as the state you live in. Typically, repayment terms from title loans and title pawns are quite short, lasting a few weeks or less.
TitleMax loans are available online or from their in-person locations.
You can go to the TitleMax website or talk to a loan agent for more information about the financial products offered by this lender. You can call toll-free at 1-88-TITLEMAX.
Rates for loans with TitleMax will depend upon factors like the equity in the collateral or financial history.
Borrowers can benefit from TitleMax funding by getting quick cash. However, high rates and brief terms may make these kinds of loans difficult to repay. TitleMax, as a lender, will also benefit from profits credited to interest rates and other fees associated with their loans.
References:
- What To Know About Payday and Car Title Loans | Consumer Advice
- CFPB Finds One-in-Five Auto Title Loan Borrowers Have Vehicle Seized for Failing to Repay Debt
Additional Loan Options
