A secured loan is backed by something you own, such as a house, a car or money in a savings account. You get the money, and the lender holds a claim on what you own, called a lien.
If you do not repay the loan, the lender may be able to take and sell it, as your state’s law allows.
A car title loan is a type of secured loan. Your vehicle serves as collateral, so approval depends more on your car’s value, how much equity you have in it, and your ability to repay than on your credit score.
This can make title loans an option for borrowers with bad credit who own a vehicle and need emergency funds.
Even though your car secures the loan, you keep it and can continue driving it to work and everywhere else while you make your payments.
We make secured title loans using cars and other eligible vehicles.
Editorial Disclosure: 5 Star Car Title Loans™ is a licensed direct lender, NMLS ID 2253575. This guide is for informational purposes only and is not financial advice. Your loan approval, amount, APR and terms depend on your state’s law, your car and your income.
Key Takeaways
- A secured loan is backed by what you own. The lender can take it if you do not repay, as your state’s law allows.
- Approval for unsecured loans relies more on your credit score. Approval for a secured loan relies more on the value of what you own and less on your credit score.
- Bad credit may still qualify with us. Banks and credit unions still check credit on secured loans, but with us your credit score is not the main factor.6
- A car opens four secured options: a secured personal loan from a bank or credit union, an auto refinance with cash out, a car title loan and a pawn loan.
- A title loan is secured by a lien on your title. You keep driving your car while you repay your loan.
- You borrow part of your car’s value. Usually about 25% to 50%.6
- Title loans cost more than bank loans. Our APRs go up to 150%, and never above your state’s cap.7
- Still paying on your car? If only a small balance is left, we may be able to pay it off with your title loan.
- Missed payments can cost you your car. If you miss payments, your car can be repossessed under your state’s law.9 Calling us before you miss a payment gives you more options.
- Title loans are meant for emergencies, not for borrowing over the long run. Applying and getting your loan estimate are free.3
What Is a Secured Loan?
Many everyday loans are secured loans. Mortgages, home equity loans, auto loans, secured credit cards and car title loans all work this way.
Besides a home or a car, lenders may accept a savings account, a certificate of deposit or valuables like jewelry.
A lender usually lends less than the item is worth, so that selling it would cover the loan.
When the loan is paid in full, the lien is removed, and the item is fully yours again.
What Is the Difference Between Secured and Unsecured Loans?
An unsecured loan has nothing behind it except your promise to repay, so approval relies more on your credit score. Approval for a secured loan relies more on the value of what you own and less on your credit score.
| Secured Loan | Unsecured Loan | |
|---|---|---|
| What backs it | Something you own, like a home or a car | Only your promise to repay |
| Cost | Usually lower at banks and credit unions, but title loans cost more | Usually higher than a bank’s secured loan |
| If you do not pay | The lender can take and sell what backs the loan, according to your state’s law | The debt can go to collections |
| Examples | Mortgage, auto loan, car title loan | Credit card, most personal loans, student loans |
Our guide to secured vs unsecured loans compares the two in more detail.
Can You Get a Secured Loan With Bad Credit?
It depends on the loan. Banks and credit unions still check your credit on a secured loan, even when a home or savings account backs it, so a low score can still mean a no.
A secured title loan from us works differently. Your credit score is not the main factor, so borrowers with bad credit may still qualify.6
What Secured Loans Can You Get With a Car You Own?
If your car is the main thing of value you own, these are the four common ways to borrow against it.
| Option | Credit | How Fast |
|---|---|---|
| Secured personal loan from a bank or credit union | Checked closely | Days to weeks |
| Auto refinance with cash out | Usually good credit | A week or more |
| Car title loan | Not the main factor | As soon as the same business day8 |
| Pawn loan | Usually not checked | Usually the same visit |
All four put something you own at risk: your car with the first three, and the item you leave at the pawnshop with a pawn loan.
How Does a Secured Title Loan Work?
When you sign, you also sign a security agreement, which gives us the right to your car if you do not repay. We are added to your title as the lienholder until you pay off the loan.
When your loan is paid in full, we release our lien, and your title is free and clear.
Can You Sell Your Car During the Loan?
No, not until our lien is paid off and we remove our name from the title. The payoff can happen as part of the sale, because a buyer or dealer may pay off the loan.
If you plan to sell, ask us for your payoff amount first. Until the loan is paid, you keep the car registered and insured.
Which Vehicles Can Secure a Title Loan?
Most vehicles with a title, including cars, trucks, SUVs and vans, can secure a title loan with us. Depending on your state, you may also borrow against a motorcycle, an RV, a boat or a commercial truck.
The title needs to be in your name. An older car or one with high mileage can still qualify if it holds enough value.
How Much Can You Borrow With a Secured Title Loan?
Our secured title loans are usually about 25% to 50% of your car’s value, depending on your income and your state’s law.6 For example, on a car worth $8,000, that is about $2,000 to $4,000.
Our secured title loans go up to $25,000. Some states set lower limits: in Tennessee and Virginia, the law caps a title loan at $2,500, and in Kentucky at $15,000.
Can You Borrow the Full Value of Your Car?
No. Lending the full value would be too high a risk, for us as a lender and for you. We lend only part of it for three reasons:
- Your car loses value while you repay. Lending only part of its value keeps you from owing more than the car is worth.
- Recovering the money costs money. If a loan is not repaid, we must repossess and sell the car that secured it to get back what we lent, and that process has costs.
- A smaller loan means smaller payments. That leaves room in your budget to repay on time.5
How Much Do Our Secured Title Loans Usually Come To?
Across 6,217 car title loans funded from December 2023 to October 2026, the median loan was $2,897. The median car was about 10 years old, with 126,000 miles.
Loan sizes differ by state, mostly because the cars are worth different amounts. Our median loan was $4,333 in California, $2,175 in Florida and $1,200 in Texas.
About 74% of the secured title loans we make are under $5,000, and 4% are $10,000 or more:
| Loan Size | Share of Our Loans |
|---|---|
| Under $1,000 | 15% |
| $1,000 to $2,499 | 22% |
| $2,500 to $4,999 | 37% |
| $5,000 to $9,999 | 22% |
| $10,000 or more | 4% |
Disclaimer: Based on 6,217 funded car title loans, December 2023 to October 2026. Median means half the loans were larger and half smaller. Your amount will differ.6
What Does a Secured Title Loan Cost?
Title loans cost more than a secured loan from a bank or credit union, because they are designed for borrowers with bad credit who were turned down by traditional lenders such as banks and credit unions.
The FTC notes that title loans “often have monthly finance fees as high as 25%, which translates to an APR of about 300%.”
Our APRs go up to 150%, and never above the cap your state’s law sets.7 Here is what loans cost in two of the main states we serve.
California: Most of our loans here are $2,500 to $9,999. For these amounts, the law caps the rate at 36% a year plus the Federal Funds Rate and requires at least 12 months to repay. At 36% APR:
- $2,500 over 12 months: about $251 a month, or $3,014 in total
- $5,000 over 24 months: about $295 a month, or $7,086 in total
Florida: Most of our loans here are under $5,000. The law caps interest at 30% a year on the first $2,000, 24% on $2,001 to $3,000 and 18% above $3,000. Each term is 30 days, and it can be extended. At those caps:
- $2,000: about $49 in interest for each 30 days
- $5,000: about $99 in interest for each 30 days
These are examples, not offers. Our guide to car title loan interest rates shows more payment examples.
What Should You Check Before You Sign?
First, check that you can afford the monthly payment. Not being able to pay is the main reason loans go into default.
Compare the APR, not only the interest rate. The APR is the yearly cost of the loan, including interest and finance charges.
Read every fee in your agreement before you sign, along with the number of payments and the total you will repay. In states such as California and Virginia, the law requires the lender to show the APR and all fees before you sign.
If your loan needs full coverage insurance, that policy is part of your monthly cost too. In most states, you repay us in equal monthly payments, with no large final payment. In Florida and Tennessee, the law sets 30-day terms that can be extended.
You can report unfair lending practices to the CFPB.
What Are the Pros and Cons of a Secured Title Loan?
| Pros | Cons |
|---|---|
| Credit is not the main factor in approval | It costs more than a bank or credit union loan |
| The amount is based on your car’s value and your income | You can lose your car if you do not repay |
| You keep driving your car while you repay | You cannot sell your car until the loan is paid off |
| Older cars and high-mileage cars can still qualify | If your loan needs full coverage, you keep paying for it until the loan is paid |
Before you borrow, read whether a title loan is right for you.
Can You Get a Secured Loan on a Financed Car?
Yes, in some cases. You may still qualify for a secured title loan if your car is worth more than you owe on it.
That difference is your car’s equity, and it is what you borrow against.
When only a small balance is left on your current car loan or title loan, we may be able to pay it off with a new title loan, and you get the money left over. Learn how a title loan works while you are still making car payments.
What Happens If You Miss a Payment?
If you stop paying, your loan goes into default. Because your car secures the loan, we can repossess your car, which means take it back, and sell it under your state’s law.9
What notice you get and whether you can get your car back by catching up depend on your state’s law. If the sale does not cover what you owe, you may still owe the rest where your state’s law allows.
If you think you will miss a payment, call us first. We may be able to find a solution with you, such as refinancing your current loan with more flexible payments.
A nonprofit credit counselor can also go over your budget and your options with you before you fall behind.
If your car has already been repossessed, our guide to title loan repossession explains your rights.
How Do You Get a Secured Title Loan From Us?
You can apply online, by phone or at one of our locations. You will need:
- Your car’s title, in your name
- A driver’s license, state ID or passport
- Proof you can make the payments5
- Proof of address
- Proof of insurance, with full coverage on most of our loans
- Your car, in person or by photos
We do not ask for your registration, a spare key, references or a co-signer.
- Apply and pre-qualify. Tell us about yourself, your income and your car. We do not run a credit check when you apply and see if you pre-qualify.
- Send your documents. Once you pre-qualify, we tell you what else your loan needs, including whether it needs full coverage. Then send your documents and photos of your car.
- Review your offer. It shows your loan amount, APR, payments and term. Take your time to check them, and call us with any questions.
- Sign and get your money. Once you decide to take the loan, we run a soft credit check as part of the final approval. That does not affect your FICO score.
When you are fully approved and sign before 2 PM local time on a business day, we send your money the same business day, otherwise the next business day.8
Our title loan requirements and how it works pages cover each step in detail. Applying and getting your loan estimate are free, with no obligation to take the loan.3
Apply Now“One thing that surprises people is an old lien still on a title they paid off years ago. If the bank never released it, the title still shows them as the lienholder, and we can’t add our lien until that’s cleared.
Before you apply, look at your title for a lienholder’s name. If you see one on a car you’ve paid off, ask that lender for a lien release letter. It’s usually a simple request.”
Bryan Solis
Head of Underwriting, 5 Star Car Title Loans™
Frequently Asked Questions
Will a Secured Title Loan Build Your Credit?
No, not with us. We do not report active loans or on-time payments to the credit bureaus.
If a loan ends in default with a loss after repossession and sale, or goes to collections, it can be reported and lower your score.
Is a Payday Loan Secured?
No, a payday loan is usually unsecured. Instead of something you own, the lender relies on your next paycheck, often through a post-dated check or access to your bank account.
Payday lenders also usually skip a credit check, according to the CFPB.
Is a Personal Loan Secured or Unsecured?
Most personal loans are unsecured. Some banks, credit unions and online lenders also offer secured personal loans backed by a car, savings or a CD.
An auto loan, by contrast, is secured by the car you buy.
Is a Title Pawn the Same as a Title Loan?
Yes, at a title loan company like ours, a title pawn and a title loan are the same thing. You borrow against your car’s title.
Some pawn shops may keep your car until you repay. With us, you keep driving it.
Questions about a secured title loan on your car? Call us, and we will go over your options before you apply.
