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Title Loan Myths

5 Common Misconceptions About Title Loans Debunked!

5 Common Misconceptions About Title Loans Debunked!5 Common Misconceptions About Title Loans Debunked!


There are many myths and misconceptions that regard title loans, which prevent consumers from getting one. In this article, we will discuss the five main misconceptions about title loans and debunk them. Before we start, however, we will explain what a title loan is and how it works.

What Is a Title Loan?

A title loan is basically a secure loan that uses your car as collateral, which means if you do not pay your loan payments on time, your lender can possess your car. Such loans are usually short-term and have few requirements to qualify, but they come at high-interest rates.

How Do Title Loans Work?

Title loans work through lenders that offer such a loan. To successfully apply for one, you will need to not only find a lender but also provide proof of ownership and your license. When you get approved, your car title is handed over to the lender as you discuss your loan terms.

Paying your loan on time is very important because if you do not, you will end up losing ownership of your car or vehicle.

Common Myths & Misconceptions

Now that we covered the basics regarding title loans let us discuss and debunk its most common myths and misconceptions.

#1: You need to hand over your car when you get a title loan

That is just untrue. Only old pawn shops would ask you to hand over your car keys when you make a purchase. Title loan lenders, however, understand the need to have your vehicle as you repay your loan. So you need only find a reputable title loan lender that won't ask for your car keys.

#2: You will face high-interest rates

While it's common knowledge that title loans charge higher interest rates than other kinds of loans, your loan terms and details will clearly state the interest rate that applies to your loan. But you, as a knowledgeable consumer, should treat this loan like a short-term obligation and pay it off on time, so you do not end up paying massive interest rates.

#3: You cannot get a title loan with bad credit or no credit history

With this kind of loan, your credit score does not matter, as your lender will only be interested in the value of your collateral. In simple terms, the more valuable your car is, the higher your loan amount can get.

#4: You will face many fees after you pay off your loan

This is another frequent misconception that keeps going around, which is also untrue. When you get a title loan from a lender, your terms and conditions will be clearly discussed and stated, so you will know if you will face any extra fees or charges.

 #5: You will lose your car if you miss one payment

This is perhaps the most dramatic myth regarding title loans. Title loan lenders and companies are not usually very aggressive with their repossession; if they were, they would lose their business. Many companies will offer you deadline extensions or new loan terms if they believe you can still pay your dues.

Title Loan Benefits and Drawbacks

If you are still wondering whether getting a title loan is your best option, here are some benefits and drawbacks of title loans that can help you decide.


  • Your credit score will not matter
  • You will get quick approval
  • You get to keep your collateral as long as you pay


  • You could face high-interest fees
  • Loan terms can be short
  • You could lose your asset

Title Loan Alternatives

On the other hand, if you decide a title loan is not for you, we can recommend you some other options.

  1. Payday Alternative Loans

Payday loans are offered by credit unions that require no collateral, but they are usually low in amount.

  1. Personal Loans

Personal loans are also unsecured loans that you take out from credit unions or banks. You can use the funds from a personal loan for anything, but your credit score will determine your interest rates. The better your credit score, the lower interest rates you will be charged.

  1. Credit Cards

Credit cards provide you with a monthly credit limit that you can use, but you are expected to pay your dues every 30 days. Unpaid balances will result in extra charges and high-interest rates.

  1. Friends and Family

Lastly, you could always ask to borrow some cash from your friends and family instead of a lender. Loans from close individuals can help you schedule flexible repayment terms with low or no interest.

Best Auto Loan Companies

We at specialize in reviewing the best companies, and we will present you with the best auto loan companies in case you are looking for this kind of loan.

1. Jovia Financial Credit Union

Jovia Financial has been helping consumers with their auto loans and purchases for over eight decades. It can help you lease, buy, or finance your car purchase. The company offers over 10,000 different car makes and models that you get to choose from, and with an excellent credit score, you can get APR rates as low as 2.59%.

To get an auto loan with Jovia Financial, you will need to become a member. Enrollment is pretty simple, but it sets a minimum credit score of 670 to be eligible.

Read our full Jovia Financial Credit Union review to know more about qualifying and purchasing the vehicle you want.

2. Navy Federal Credit Union

Our second recommendation for the best auto loan providers goes to Navy Federal Credit Union. NFCU offers the best auto loan rates for active and retired military members and their families.

NFCU offers over 20,000 different car makes and models, and their loan terms can be as long as 84 months. To be eligible for an auto loan from NFCU, you need a credit score of at least 700, and you could get an APR as low as 2.29%.

Read our full Navy Federal Credit Union Auto Loan review to know how to qualify and purchase the vehicle you want.

3. Carvana

Carvana is our third recommendation for one of the best auto loan providers. Carvana offers the easiest auto loan process, where you get a prequalification that is valid for 45 days. Getting prequalified with Carvana will not affect your credit score.

Carvana offers auto loans up to $85,00 with a maximum loan term of 72 months. While it does not state a minimum credit score requirement, the higher your credit score, the better; you could get APR as low as 3.90%.

Moreover, Carvana offers a 7-day money-back guarantee from the moment you get your car, but with a limit of 400,000 miles. So if your car breaks down during that period, you are entitled to a full refund.

Read our full Carvana review to know more about its auto loan services, benefits, and process.

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