This comprehensive guide explains auto equity loans, detailing how they work, eligibility criteria, repayment processes, and legal considerations in certain states. It highlights the high interest rates involved and emphasizes consulting financial experts before proceeding with such loans.

Auto Equity Loans Explained

Introduction to Auto Equity Financing

An auto equity loan is a secured borrowing option that enables vehicle owners to access funds by leveraging their car's title. The borrower grants a lien on the vehicle’s title, serving as collateral, and temporarily transfers the title to the lender in exchange for the loan amount. Below are common questions to better understand these loans:

How do title loans on vehicles work?

Commonly called auto title loans, these provide a small cash sum for a short period.

The borrower hands over the vehicle's title to the lender.

Repayment windows usually span 30 days.

If the borrower defaults or cannot pay back timely, the lender can repossess the vehicle in settlement of the unpaid balance.

Are title loans on cars available nationwide?
Due to their short-term, high-interest nature and lump-sum repayment, these loans are authorized only in specific states (25 states). Here are some states where auto title lending is legal:

Alabama

Arizona

Delaware

Florida

Georgia

Illinois

Missouri

Nevada

Tennessee

Texas

Wisconsin

Understanding APR on these loans

The Annual Percentage Rate (APR) shows the total yearly cost, including interest and fees.

Auto title loans typically have an average APR of approximately 300%, meaning the total owed can be three times the original amount borrowed.

Since these are short-term—about a month—the high monthly interest rate (~25%) causes APR to increase quickly through rollover fees.

Basic eligibility criteria for a car title loan

Applicants must be at least 18 years old with a valid government-issued ID.

A lien-free vehicle title in the applicant's name and proof of steady income are required. Income sources include employment, retirement, unemployment benefits, or other reliable means.

Applicants can choose to apply either in person or online via various platforms.

In-person applications allow immediate vehicle inspection and instant loan offers.

Loan repayment process

Upon approval, a repayment plan with due dates is provided by the lender.

Payments can be made in cash or by debit card at branches.

Often, borrowers have the option to settle the entire loan in one payment without penalties.

Some trusted auto title lenders include:

CashNetUSA

Speedy Cash

Check Into Cash

TitleMax

LoanMart

TMG Loan Processing

Important Reminder:

This content is compiled from research, expert advice, and available data. Variations may occur based on individual lenders or evolving regulations. Always consult a financial advisor before proceeding, as laws and details can change over time.