How Do Online Title Loans Work?

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With slow growth, stubborn inflation, and high interest rates, the global economy is struggling to say the least. In such trying times, many have to resort to taking loans to deal with unexpected financial needs. If you own a vehicle, this process can get a little easier for you. Vehicle ownership allows you to get a title loan. Let us briefly examine what title loans are, how they work, and if you can get a title loan on a salvaged car. 

What Are Title Loans?

These are high-interest, short-term loans that use your car as collateral and are ideal for those with bad credit. However, your lender can repossess your car if you don't repay the loan on time.

Your loan limit lies at 20% to 50% of the total car value, and you can get loans that range from $100 to $10,000 or more. While no credit checks and quick approval and access to funds are ideal for borrowers, financial risks are attached, such as falling into debt traps, short repayment terms, high interest and fees, and the possibility of losing your car.

How Do Online Title Loans Work? 

Let's take a brief look at how you can get online title loans. 

        1.  Check Your Car's Title Status

Your car’s value secures car title loans, and anyone over the age of 18 with a clear title (meaning your vehicle is in your name), no loan liens, a reliable source of income, and a driver's license or other identifying information can apply for it even with poor credit. Taking such a loan will mean you physically possess your car, but the lender is listed as the owner on the title until you pay back the loan.

        2.  Apply for Online Loan

You can opt to complete the process digitally, where you’ll fill a car title loan online application with your financial information and documents such as proof of income, proof of insurance, Tax returns, pay stubs, photo ID, or driver's license. While bad credit doesn't prevent you from getting a title loan, some lenders may have you undergo a credit check for risk assessment.

        3.  Vehicle Appraisal

After submitting your loan application, you have to wait for vehicle appraisal, i.e., your lender may ask questions about your vehicle or send an appraiser to physically inspect your car to know its exact value. Inspection allows lenders to determine the loan amount they give you based on vehicle market value, mileage, and condition. As you're putting your vehicle as collateral, your lender may require a copy of your car key.

        4.  Sign the Contract, Receive Funds, and Pay Off the Loan

After your loan is approved, provide your bank account details and sign the paperwork (make sure to read the fine print carefully as the document is legally binding), and wait for lenders to deposit the funds. 

Online title loans offer flexible repayment options to meet your needs. While lenders typically design it so you can pay back within a month, you can roll over the loan, so you don't need to pay back the entire fund at once (although interest will accumulate at a high rate).

Can You Get a Title Loan on a Broken or Salvage Car? 

A salvage title indicates that your vehicle was severely damaged, generally due to an auto accident, flood or fire damage, being vandalized or stolen, etc. Securing a loan with a salvage title can be challenging as lenders see it as high risk. However, you can still opt for it if you find willing lenders. They may look at other requirements, such as proof of consistent income or steady employment. However, it may have less favorable terms, such as higher interest rates, down payments, or shorter loan terms to mitigate the risk of financing a salvage title car. 

Be wary of lenders with costly fees or offering deals too good to be true because you can get caught in fraud, so make sure you're looking at reviews, checking their reputation, and comparing fees and interest rates. 


Online title loans are ideal for those with a bad credit history and no other alternatives available. The quick and easy application process right from your home makes it easy to opt for them, but you should be aware of the financial risks attached. Be sure to compare and contrast different options and read reviews online to avoid any potential scams. 


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