A car title loan is exactly what it sounds like: a lender gives you a cash loan in exchange for your car title — essentially, you are using your car as collateral for the loan. The loan amount is usually small, and the loan term is typically about 30 days. Car title loans come with fees and interest rates you must also pay back to reclaim your car title. If you cannot repay the loan in the agreed upon time frame, the lender has the right to keep your vehicle.

1. Title Loan Requirements

Title loans, also called pawn titles, are not available if you are still making car payments. You must have a lien-free title to borrow because you are offering your personal property as collateral. You will also need to show a valid photo ID, give the lender your title, and complete a detailed application. In some cases, the lender asks for an extra copy of the key to your car or requires you to purchase their affiliated roadside assistance plan.

car title loansalexkich / Getty Images