Title Loans vs. Registration Loans

Car title loans and registration loans are two options you might consider if you need temporary financial relief – but which one should you choose?

Let’s take a closer look at car title loans and registration loans so you can choose the right kind of financing for your situation.

Car title vs. registration loans

When debating between a title vs. registration loan, it’s important to note that title loans use your vehicle’s title as collateral. A registration loan does not.

A car title is a document that proves ownership of a vehicle. Titles typically include information like your car’s make, model, year, and vehicle identification number (VIN).

When you buy a new car, the seller will transfer the title to the auto lender financing your purchase. That lender then holds the title until you’ve repaid the amount you owe in full, at which point the title transfers to you.

Your car’s registration is documentation that shows you’ve registered your car in your state, have shown proof of auto insurance, and paid any necessary taxes and fees. You’ll also need to register your vehicle before receiving its license plate.

Unlike a vehicle title, which only needs to be changed if you pay off a car loan or transfer ownership of your vehicle, a car registration must be renewed regularly.

What is a title loan?

A car title loan is a type of secured loan that uses your vehicle as collateral.

Most title lenders require you to own your car free and clear to get a title loan. This means that you’ve made any final auto payments, and you have the title in hand.

Once you’re approved for a title loan, you’ll give the lender your car title in exchange for a lump sum of money. The amount you receive is based on the value of your car. You’ll still be able to drive your vehicle while making loan payments, but you must repay your loan on time to avoid having your car repossessed.

Pros and cons of car title loans

Like any type of financing, title loans come with benefits and drawbacks. It’s important to weigh the pros and cons, compare rates, and choose a reputable lender to ensure you’re making the best decision for your financial situation.

Pros

• Larger loan amounts: Since you’re using a fully paid-off vehicle as collateral, you may receive more money from a title loan than you would with a registration loan.
• Lower interest rates: Car title loans often have lower interest rates than registration loans.

Cons

• You must have a clean title: Borrowers must own their car outright to qualify for a title loan; there can’t be any liens on the vehicle.
• You could lose your vehicle: If you don’t repay the loan as agreed, the lender can repossess your car to recoup the loss.

What is a registration loan?

With a registration loan, you use your vehicle’s registration to borrow money. Lenders may approve you for a registration loan even if you don’t own your car outright. The amount you receive will be based on your income and the most recent value of your car.

Upon approval, you can continue to drive your vehicle and pay off your registration loan according to the agreed-upon loan terms.

Pros

• You don’t have to own your car: Borrowers can qualify for a registration loan without owning a car outright.
• No repossession risk: Unlike with title loans, the lender can’t repossess your vehicle if you default on a registration loan.

Cons

• Higher interest rates: Since you’re not providing your car title as collateral, registration loan interest rates tend to be higher.
• Smaller loan amounts: Registration loans typically have lower borrowing limits.

Car title vs. registration loan: Which one is right for me?

When comparing your options, you might have trouble telling these two kinds of loans apart. But here are the main differences that can help you decide which loan is best for your situation:

Title loans are for vehicle owners

You must own a paid-off vehicle to qualify for a title loan. If you still owe money on your car or you’re leasing one, this loan option is not available to you.

Title loans offer larger loan amounts

Compared to auto registration loans, title loans generally offer larger borrowing limits. You may get approved for anywhere between 25% to 50% of the value of your car.

Registration loans can come with higher interest rates

Since you don’t use your car as collateral, a registration loan carries more risk for the lender. This higher risk results in higher interest rates that can cost you hundreds or even thousands of extra dollars.

Similarities between car title and registration loans

While these loans do have important differences, there are also some borrower advantages they have in common.

You don’t need great credit to get approved

Don’t worry if you don’t have the best credit score. Many title and registration lenders have lenient credit requirements. This can increase your chances of approval, even with bad credit.

You can pay off your loan early without penalties

If you receive an unexpected windfall, such as birthday cash or a work bonus, you can put additional money toward your car title or registration loan and pay it off early without any penalties from the lender.

You may be able to apply online

Some lenders that offer title and registration loans have an online application process. You can apply from your computer or mobile device, and you’ll often know within minutes if you’ve been approved.

What do I need to apply for a title loan?

Here at Advance America, we’ve partnered with LoanCenter to make applying for title loans easy.

First, you’ll need to verify that title loans are available in your state. If so, you can submit your application online along with the following documentation (may vary by state):

• A government-issued ID
• Your car title
• Proof of ownership, such as vehicle registration documents
• Proof of residence
• Proof of income
• Proof of insurance

Benefits of an online car title loan

Applying online for a LoanCenter title loan through Advance America has many advantages.

Easy application

You can complete an online car title loan application in minutes from the comfort of home. Once you’re contacted to finalize the process, you bring your vehicle to a nearby location to have it appraised.

Quick funds

Once your car is appraised and all the paperwork has been approved, you'll receive your funds right away.

You don’t need good credit

Even if you have poor credit, you can still qualify for a title loan because your car is your promise to repay. This may allow you to borrow more money than you’d qualify for with any other type of loan.

Alternatives to title and registration loans

If you don’t want to use your vehicle as collateral, we’re happy to work with borrowers from all credit backgrounds to find an unsecured loan option that works for you. These include:

• Lines of Credit
• Installment Loans
• Payday Loans

At Advance America, we base our approval decisions on your income and employment status, not your credit score. Visit us in-store or complete an application online to get the money you need as soon as today.