Thinking about taking out a title loan?
About 5.2% of consumers did in 2024, which is a jump from 3.7% in 2023. The good news is, as traditional loans have tightened up, more lenders have opened their doors for title loans with easy access and fast approval.
But…
Before you apply, here’s the dirty little secret you should know first.
Title loan approval is easier than a bank loan, but it’s not a free-for-all.
You may have heard the stories of people getting “approved for a loan up to $35,000” and asking what do you need to qualify for title loan and taking out huge sums of money from unsuspecting lenders. But there are still very real factors that influence title loan approval.
The better prepared you are with the following requirements in mind, the faster your approval time and chances of getting that money in your pocket.
If you are wondering how do title loans work? Approval is usually quick and easy once you understand the top factors lenders look at.
What you’ll discover:
- Vehicle Value and Condition Assessment
- Income Verification Requirements
- Credit Score Considerations
- Documentation Needed for Approval
- State Regulations That Affect Approval
Vehicle Value and Condition Assessment
Your vehicle is the main factor in the title loan approval process. In fact, it’s the only real requirement you must meet.
Why? You are using your car as collateral, so the lender needs to know exactly how much it’s worth. They are not going to take your word for it — they’ll assess it themselves to determine your loan amount.
Typically, title loan companies evaluate the following:
- Make, model, and year of your vehicle
- Current mileage and overall condition
- Market value based on industry resources such as Kelley Blue Book
- Any existing liens or outstanding loans
The better shape your vehicle is in, the more money you can potentially borrow. Title lenders typically offer 25% to 50% of your car’s assessed value.
But…
Minor cosmetic issues like scratches or dents should not hurt your approval odds. Lenders are mostly concerned with mechanical condition and ensuring the car runs properly. A little body damage? Not a problem.
Income Verification Requirements
Want to know a secret?
Title loan income requirements are much more flexible than traditional lenders. Banks and credit unions want to see a stable employment history and stellar credit scores. Title lenders only care about one question: Can you afford the monthly payments?
Most title loan companies will accept income from:
- Full-time or part-time employment
- Self-employment/freelance work
- Social Security benefits
- Disability payments
- Unemployment benefits
- Retirement income
You’ll need to provide recent pay stubs, bank statements, or benefit letters to prove your income. Documentation requirements will vary by lender, but it is typically much easier than banks.
Don’t Believe Me?
Many title lenders have no minimum income requirement. Instead, they are most interested in whether your income is steady and high enough to afford the loan payments based on your other monthly expenses.
Credit Score Considerations
If I told you that most title loan companies don’t even check your credit score. And when they do, they are much more lenient than traditional lenders, would you believe me?
Truth is…
Title loans are secured by your vehicle, giving the lender collateral to recover their money if you default on the loan. This security allows them to approve people with:
- Poor credit scores
- No credit history
- Recent bankruptcies
- Previous loan defaults
Some lenders do perform a credit check, but it’s often only to verify your identity and ensure no other title loans are on that same vehicle. Credit score rarely factors into the approval process at all — it might just affect your interest rate or loan terms.
Cool right?
That’s why so many people who can’t qualify for traditional financing are now turning to title loans.
Documentation Needed for Approval
Approval for a title loan requires specific documents, but they are not overly complicated.
Standard requirements include:
- Clear vehicle title in your name
- Government-issued photo ID (driver’s license, passport, or state ID)
- Proof of income (pay stubs, bank statements, or benefit letters)
- Proof of residence (utility bill or lease agreement)
- Vehicle insurance documentation
- Vehicle registration in some states
Note: The vehicle title must be “clear”, meaning you own the vehicle outright with no outstanding loans. Some lenders work with vehicles with small remaining balances, but most lenders require a fully paid off car.
Pro Tip: Gather all documents before applying in person at a lender. The more organized and prepared you are with documents in hand, the quicker the approval process will go.
State Regulations That Affect Approval
Did you know…
Title loans are not all created equal by state. State laws heavily influence the approval process and loan terms. Some states have more strict regulations that cap interest rates and loan amounts. Other states give lenders more leeway.
Key state factors include:
- Maximum loan amounts permitted
- Interest rate caps and other fee limits
- Minimum and maximum loan terms
- Repossession procedures and borrower protections
State regulations do not typically influence approval, but they do impact how much you can borrow and how much you pay in interest and fees.
How Long Does Title Loan Approval Take?
You may be asking why people get title loans? The speed. Approval is usually the same day, often within hours.
Typical approval timeline:
- Application review: 15-30 minutes
- Vehicle inspection: 15-30 minutes
- Final approval and funding: 1-2 hours
Truth be told…
Title loans are meant for emergency situations where you need cash ASAP.
Factors That Can Hurt Your Approval Chances
While title loan approval is typically easier than traditional loans, there are still certain things that can work against you and lower your odds of getting approved:
- Outstanding title loans on the same vehicle
- Severely damaged vehicles with no mechanical issues
- Vehicles worth less than minimum loan amount
- Inability to provide required documents
About 1 out of 10 title loan borrowers also get their car repossessed eventually, so lenders do factor in your repayment ability when deciding approvals.
Final Thoughts on Title Loan Approval
Title loan approval is quick and easy for most people since the requirements are far less stringent than traditional loans. While it’s less of a free-for-all than some make it seem, knowing what lenders look at will help you be more prepared and improve approval odds.
Keep in mind your vehicle’s value, proof of income, and documentation are the primary approval factors.
But here’s the important part…
Title loans are high-interest loans with the risk of losing your vehicle if you cannot repay. Make sure you understand all terms and have a good repayment plan in place before signing on the dotted line.
Bottom Line
Title loan approval is based mainly on your vehicle’s value, proof of income, and proper documentation. Title loans are more accessible than traditional financing, but should still be used carefully due to high costs and repossession risks.
If you need emergency funds and meet basic requirements, a title loan can provide fast access to money.
