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Can I Get a Loan on My Car? (The Answer Is Yes)

We all get into situations from time to time when money is tight. It’s a special kind of stress to have bills you don’t know if you can pay.

The good news is that there are almost always options available. “I need cash but I don’t have any assets for collateral.” That’s one path. “I don’t have the credit for a personal loan so can I get a loan on my car?” Yes, in many cases, you can! Here’s a peek into the process.

How Do Car Title Loans Work?

A loan on your car is called a car title loan. This is essentially a secured loan that uses your vehicle as collateral.

While the loan is active and you are still paying it off, the lender has a lien registered against your vehicle, which could be a car, truck or van. This registered lien gives the lender the security that they need to allow them to quickly and easily give you the desired loan. It serves both ends, it gives you the ability to borrow and the lender the security to lend.

However, you still keep the actual vehicle in your possession and continue driving it while you’re paying back the loan. Nothing changes from before the loan, it is just that there will be a lien registered against it during the loan and it will be removed when the loan is paid off. 

What’s the Purpose of a Car Title Loan?

A car title loan is meant as a way for people to get cash without selling their vehicle or other assets. It’s a common option for people whose credit is not strong enough to get an unsecured loan in the amount they need. Because the lender registers a lien against your vehicle, you are a lower lending risk for them and allows them to lend with less hassle.

Car title loans are typically fairly short-term loans as well, with pay-off terms usually limited to a few years or less. Some last only a few months.

However, unlike certain types of loans like business loans, there are no limits on how you can spend the money. Many borrowers use the cash to make home repairs, fund a gap in their income, pay for unexpected travel needs, or cover other expenses. 

Am I Eligible to Get a Loan on My Car?

Every situation is unique, and it’s up to each lender to determine if you’re eligible for a car title loan. Fortunately, though, these loans tend to have few criteria.

In most cases, you will need to own your vehicle outright with no liens registered against it. If you have a lien, it means someone else has a claim to your vehicle as collateral. For instance, if you get an auto loan to pay for the car, the auto lender has a lien registered against your vehicle until you finish paying back that loan.

It’s easiest to get a car title loan if there are no liens registered against your vehicle. You may still be able to get a title loan if there’s a lien, but only if that lien is very small compared to the value of the vehicle. Ultimately, it will come down to a case-by-case basis.

In addition to this, there are typically no credit checks performed as the lender is relying on the value of your vehicle, not your credit score. However, if you do not show stability in regards to where your live and work a credit check may be the only way to determine the facts. 

You will typically need to prove your income as well, so the lender knows you have a way to pay back the loan. In addition, your name must be on the vehicle’s registration or you must be an owner or part owner of a corporation that the vehicle is registered to. If you have a vehicle that is registered under someone else’s name, you would need that person to co-sign the loan. 

What Types of Vehicles Qualify for a Title Loan?

People talk about car title loans, but cars are not the only vehicles you can use for a car title loan. On top of the typical trucks and SUVs, you may also be able to get a title loan with a boat, motorcycle, or even recreational vehicle. It all depends on the circumstances and the vehicle’s value. Typically, the lender would have to physically hold onto the boat, motorcycle of recreational vehicle during the term of the loan. These are sometimes called storage loans.

How Much Can I Borrow Against My Vehicle?

It’s great to know that you can borrow against your vehicle’s value, but will that give you enough to cover your needs? While your loan amount will be approved mainly based on your vehicle’s value, several other criteria like your income or stability will be considered too.

In general, car title loans can reach up to 50% of the vehicle’s value. For instance, if your car is worth $10,000, you may be eligible for a loan of up to $5,000.

Keep in mind that this is the current value of your vehicle, not the amount you originally paid for it. The Canadian Black Book is a widely-used resource that will give you your vehicle’s current value. The lender uses this tool and looks at the wholesale value, not the retail value. It’s based on the vehicle itself as well as its current condition. Values given will also vary by such factors as the kilometres, trim level, accessories and the general condition of your vehicle.

Remember, though, that these numbers are maximums. Your vehicle might be worth $10,000 but if you do not have the income to reasonably pay back $5,000, you’re not likely to be approved for that large of a loan. 

How Do I Get a Loan on My Car?

Thanks to modern technology, the logistics of getting a car title loan are easier than ever. You can apply online at any time.

You will need several pieces of documentation to complete the process. While each lender is unique, our requirements include:

• Your valid driver’s license
• Two forms of identification, such as your birth certificate, passport, health card, SIN card, permanent resident card, citizenship card, or an alternative government-issued ID
• Pictures of the front and back of the title to prove that you own the vehicle
• Proof that you have current car insurance
• Proof of your address in the form of a utility bill that includes your address and a current date
• A recent paystub or other proof of income in certain cases
• A voided cheque or pre-authorization form
• Pictures of your vehicle, including all sides of the vehicle’s exterior as well as the front and back interior, odometer, and VIN

With those documents in hand, you can apply online in a matter of minutes. We will process your application, determine the loan and terms you qualify for, and disperse your money when you agree to the details of the loan.

Getting Your Car Title Loan Today

If you are wondering, “Can I get a loan on my car?” the answer is probably “Yes!” All in all, car title loans are quick and secure ways to get the cash you need. To start the process, apply online or contact our lenders in Ontario with any questions.