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What Are Title Pawns, And How Do They Work

Title pawns have been around for decades and used to be much more popular than the typical car title loans we see today. With an auto title pawn, you are handing over the vehicle to a lender or pawnshop as collateral for a secured loan. Fall behind on the loan and risk losing your car as the lender has the right to sell it at auction. Auto pawn companies are typically more lenient regarding how much they lend because the loan is backed up by an actual vehicle, and they do not need to deal with a repossession.

Lenders take on these types of secured transactions with minimal underwriting because the loan is backed by the collateral in your vehicle. Title loan companies are also more understanding since they are working with something they can liquidate quickly to recoup their losses. At the same time, an unsecured lender can’t fall back on any collateral if there’s a loan default.  The good news for someone considering an auto title pawn is that the interest or APR will sometimes be lower as there is less risk than a typical online title loan.

Title pawn loans range from $1,000 to $25,000 and you can sometimes pull out up to 70% of your vehicle’s equity value with a loan. Your vehicle’s resale value calculates your exact loan amount, and factors such as its age, mileage, and current condition will influence the loan amount and repayment terms. You don’t need good credit to pawn your vehicle, and these loans often have repayment terms of 12 to 50 months.

What’s Required To Pawn A Car Title

To qualify for a title pawn, you need a vehicle with equity that has to be completely paid off. Like car title loans, you need a vehicle titled in your name with no other cosigners. While many lien free 2008 cars, motorcycles, and RVs will qualify as collateral for a title pawn, you stand the best chance of getting approved with a 2015 or newer vehicle with fewer than 80,000 miles.

You need proof that the vehicle is registered with your state’s DMV, it must have full insurance coverage and in some states, you must show proof that it’s passed a recent emissions test. Title pawn lenders will also require proof of income from your employer or bank statements showing you make enough money to afford the monthly payment.

Expect a vehicle inspection with any title pawn, which can occur at any local office or authorized repair shop. The inspection can be completed right before you sign over the car’s title, and most inspections are completed in 10 minutes or less. You’ll need to verify the mileage and VIN on your vehicle, and your lender may ask you to take the car on a brief test drive. They may ask to put an ignition switch or GPS tracking device on your vehicle, but that’s often only if you borrow $10,000 or more, which is more typical with title loans where you don’t pawn the car itself.

What Else To Know About Title Pawning

Title pawning can be an effective way to get cash by tapping into your car’s equity. Your interest rate can be lower than a personal loan as your lender has security in the form of your car title to fall back on if you ever default. Title pawns are also great for someone who needs cash quickly, as there are really no other underwriting requirements besides having a paid-off vehicle and proof of income. Just think about someone applying for an unsecured loan and how much risk that lender is taking on by offering $1,000 or more. With a title pawn, they can offer a lower interest rate and not stress about your credit score because there’s significant equity backing up their loan.

Another thing to remember about title pawning is that you always have the option to renew or refinance your loan with improved payoff terms. Whether you find a new lender or reach out to your existing title pawn company, there’s a good chance you can get a significant reduction in your interest rate after you’ve made several on-time payments. Interest rates are high with an auto title pawn, and your lender doesn’t want to lose you to a competitor! They prefer that you keep making your monthly payments with a lower interest rate versus having another company buy out your loan. Contact Premier Title Loans at 800-250-6279 or apply online for a refinancing quote in minutes! We offer better payoff terms and can often find you a lender that will reduce your APR by 20% or more!

Difference Between Auto Pawn Loans and Auto Title Loans

Auto pawn loans differ from traditional car title loans and registration loans in one particular way. Yes, you are using your car’s equity or vehicle registration info as collateral for a loan for these types of loans. But with an auto pawn loan, you hand over the vehicle itself as collateral instead of your car’s title. This means you won’t have day-to-day use of your vehicle, which can be a big problem for someone who needs their car to get to work or get around town.

Another difference between title pawns and title loans is that you can borrow more with a title pawn than you’d ever get with a title loan. While title loans offer higher loan amounts than unsecured loans, they’re still often capped at 50% of the vehicle’s value because you still get to keep your vehicle while making the payments. Yes, your lender has the car’s title as collateral, but what happens if you default on the loan and they can’t repossess your vehicle for whatever reason?

With a title pawn, though, your lender is holding the car as collateral, and they can immediately take possession of it once you fall behind. There’s no need to hire a tow company and repossess the car if they already have it. Because of this, title pawning companies typically offer loan amounts based on up to 75% of the vehicle’s resale value.

Benefits & Risks Of Car Title Loans Pawns

An auto pawn can be a decent option for anyone with less-than-perfect credit who needs quick cash, especially compared to other loan offers that require excellent credit. Auto pawn companies, like title loan lenders, offer financing based on the vehicle’s value, which means loan amounts that can approach $20,000 for high value cars and trucks. Another benefit is that you can be approved with a FICO score of 650 or less! Now compare that to personal loan lenders that require excellent credit, and you’ll see how easy it is to pawn your vehicle for a secured loan.

However, there are risks when you decide to pawn your vehicle, and the most severe consequence involves defaulting on the loan. In this scenario, your car will be repossessed and sold at auction if you don’t pay the amount due, plus any fees. Remember, by pawning your car, your lender is the main lienholder on the vehicle, and they have first right to your car before you or anyone else. If there’s any breach of the loan agreement, they have the right to start the repossession process and they can even come after you for any amount owed above what your vehicle sells for! Other risks involve the high interest rates associated with title pawns. While some bank lenders charge interest rates of less than 25% for an unsecured loan that requires good credit, a title pawn can come with an APR of 50% or more!

Apply For A Title Pawn With Premier Title Loans

Are you ready to see what loan amount and interest rate you can expect by pawning your car title? Apply today with Premier Title Loans, and we’ll give you a no-obligation lending decision in 30 minutes. All it takes is your vehicle’s make, model, and year to get you a quote. Most customers with a newer paid off vehicle can qualify for a title pawn of at least $2,000. Start the process online or call 800-250-6279 today!