California Title Loan Laws 

Title loans may vary from state to state due to differences in regulations and laws governing lending practices. In California, title loans offer a speedy and legal solution for those in need of cash by using their vehicle’s title as collateral. 

While convenient, these loans entail high interest rates and fees⁴. Moreover, failure to repay could lead to the repossession of the borrower’s vehicle, making careful consideration essential before opting for this financing option.

Key Takeaways

• Legal Status: Title loans are legal in California. However, they are subject to regulations and restrictions aimed at protecting both borrowers and lenders.
• Collateral: Your vehicle’s title serves as collateral in a title loan. If you fail to repay the loan, the lender has the right to repossess your vehicle.
• Licensing: Lenders offering title loans in California are required to be licensed by the California Department of Financial Protection and Innovation (DFPI).
• Interest Rates: In California, title loan interest rates are capped at 30% for loans under $2,500. Rates may vary for loans exceeding this amount.
• Loan Amounts: Borrowers typically have access to up to 50% of their vehicle’s appraised value as the loan amount.
• Repayment Terms: Title loan repayment periods in California generally range from 30 days to 36 months, providing borrowers with flexibility in repayment.

What is a Car Title Loan?

A car title loan is a unique borrowing arrangement. Here, the borrower’s vehicle title serves as collateral for the loan¹.

Notably, borrowers maintain full access to their vehicle for regular use while the title is held as security. Additionally, they benefit from the convenience of accessing funds quickly², often within one business day, to address various financial needs, particularly emergencies⁴.

By leveraging their car title, borrowers can secure a loan amount of up to 50% of its appraised value¹. This applies regardless of their credit score—making it an accessible option even if they have bad or no credit history. Moreover, flexible monthly payment options are available to suit their budget and repayment preferences⁴.

How Title Loans Work in California 

Title loans, also known as auto equity loans or pink slip loans, are a form of secured loan. In this arrangement, the borrower provides their vehicle title to the lender in exchange for funds. Once the loan is fully paid off, the lender returns the title to the borrower. However, it’s crucial to note that if the borrower defaults on payments, the lender may repossess the vehicle to recover their funds.

Even with poor credit, individuals can access title loans¹. This is because the primary consideration is the value of the vehicle and the borrower’s ability to repay the loan, rather than their credit score.

Despite their convenience, it’s important to note that title loans typically come with higher interest rates⁴ compared to traditional bank loans.

Requirements to Obtain a Title Loan in California 

There are a few things needed in order to obtain a car title loan in California: 

1. Identification: a valid driver’s license, passport, or government issued ID
2. Proof of ownership: a clear title with your name free of liens or loans
3. Proof of income: a way to ensure the borrower can repay the loan 
4. Age: you must be at least 18 years old to get an auto title loan in California
5. Proof of residency: such as a utility bill, copy of lease, registration, etc. 

Loan Terms and Interest Rates in California 

Title loan rates and terms in California can vary depending on the lender and individual circumstances¹, but there are certain regulations in place to protect the consumers.

Here are Some Guidelines:

Overview of Car Title Loans in California 

Title loans are popular among individuals who face financial emergencies and people who may have bad or no credit. There are a few things that are very important to know before applying for a title loan:

• Income: Income is a significant factor in the approval process¹. It demonstrates to the lender your ability to repay the loan on time. Even if you’re unemployed, you might still qualify for a title loan. Income can take different forms, such as business profits or disability insurance. Having enough income boosts the chances of loan approval.
• Loan Amounts: In California, the majority of companies establish a minimum loan threshold of $2,501, although a few may provide smaller amounts. This requirement stems from California’s title loan regulations, which limit interest rates for loans below $2,500.
• Repayment Terms: Car title loans in California typically range from 30 days to 36 months. Borrowers must repay the loan amount and any accrued interest by the end of this period.
• Additional Fees: Lenders may charge fees such as origination fees, late payment fees, and processing fees. Always review the agreement carefully for full details³.

Repossession Regulations in California 

In California, the repossession processes for vehicles is regulated by the California Civil Code (sections 2981-2984.8). If a borrower defaults on the loan the lender has the right to start the repossession process.

Borrower’s Protection and Rights in California

California has repossession laws and procedures to protect the borrower. If the borrower defaults on payment(s) the steps include: 

• Borrower must be notified within 48 hours of repossession
• Borrower must be provided information to reclaim the vehicle
• Borrower must be given 60 days to reclaim before vehicle can be auctioned
• Borrower must be given 15 day notice before vehicle auction

Lenders Protection and Rights in California 

The lender of the loan, in California, has a right to repossess the vehicle if payments are not made. Upon default in loan or breach of contract the lender may begin the process of repossession. These steps include: 

• Lender must notify local law enforcement within one hour of repossessing the vehicle
• Lender must notify borrower within 48 hours of repossession
• Lender must provide borrower with reclaim information 
• Lender must provide all legal notice to borrower of auction 
• Lenders can sell repossessed vehicles by auction or private seller after 60 days. 

How to Find a Reputable Title Loan Lender in California

Finding a reputable title loan company in California involves some research and careful consideration. 

Here are Some Steps You Can Take:

1. Check Licensing: Make sure the title land company is licensed to operate in California. You can verify this by checking with the California Department of Business Oversight.
2. Read Reviews: Look for reviews or testimonials from other borrowers who have used the title loan company. 
3. Understand Key Terms: Be sure to read and fully understand terms and conditions of your loan¹. If you do not understand something ask the lender or even google for help.
4. Customer Support: It is important to pick a lender who has a caring customer support team to answer all questions and concerns that may arise. 

Other Options to Car Title Loans 

Borrowers with bad credit have limited options, but there are additional loan options available in case you need emergency funds⁴.

Here are several alternatives to car title loans that you may consider: 

• Unsecured Personal Loans: You could apply for a personal loan. These are typically unsecured loans, meaning you do not need collateral for the loan. However, they often come with a higher interest rate. Poor credit can affect your chances of being approved for these types of loans.
• Credit Card: Despite having a low credit score, individuals can still obtain funds through credit card loans. These loans offer speedy access to cash without undergoing a credit check. However, it’s crucial to understand that these loans can come with high costs. Additionally, they may have adverse effects on one’s credit rating.
• Credit Card Cash Advance:  If you have a credit card with available credit, you could use it to obtain a cash advance. Cash advances often come with higher interest rates than purchases. 
• Payday Loan: Payday loans are short-term, high interest loans intended to cover borrowers expenses until their next payday. These loans are usually for smaller amounts and are often repaid on the borrower’s next payday. 

Before pursuing any alternative to a car title loan, it is important to carefully consider the terms and potential consequences of each option. Evaluate your financial situation, explore your personal options, and choose the one that meets your needs. 

Conclusion

Legal regulations, in California, offer protection for both borrowers and lenders. This protection ensures that you secure your loan from a reputable lender, ensuring the safety of your financial resources. Additionally, this ensures that your loan complies with California title loan laws. It also provides you with peace of mind and legal protection throughout the borrowing process¹.

5 Star Car Title Loans offer car title loans for California residents; all in accordance with California’s laws. 

If you have any questions or need clarification regarding California’s laws or loan application process, don’t hesitate to reach out to us at (888) 557-7115. 

FAQ: 

Are Title Loans Legal in California? 

Yes! Title Loans are legal in California. 

Do Title Loans Hurt Your Credit? 

In many cases, title loans will not impact your credit score. When lenders don’t conduct a credit check, there will not be a hard inquiry recorded on your credit report. 

Are Title Loans Only Available For Cars? 

Although title loans are most common for cars, they are available for trucks, SUVs, motorcycles and other types of vehicles. 

How/When Do I Get My Title Back? 

After fully paying off your car title loan, the lender will remove the lien and notify the DMV. You will need to bring the lien-free title document and application for replacement or transfer of title (REG 227) to your local DMV office to request an updated title. The release from the lienholder must be notarized for the DMV to issue a new registration and title.