Learn How to Use Your Car as Collateral for a Loan If You Still Owe on Your Vehicle

Are you in need of emergency funds? In this day and age, many people are choosing alternative forms of funding to make ends meet. Title loans are in place to assist qualifying borrowers when unexpected financial obligations arise. Your check engine light has been on for the past six months, and you’re still trying to save up the money to take it to a mechanic. Your child caught strep throat from drinking another kid’s juice box. Now, you have to pay for the emergency room visit and Strep throat medicine on an extremely tight budget. Life is filled with ups and downs, and it can be challenging to be prepared for the unexpected. Title loans can often allow borrowers to use their car as collateral for a loan, even if they still owe on the vehicle. 

Before determining if a title loan could potentially be a good fit for you, it will be best to understand the different options out there. 

Credit Cards

Credit cards allow borrowers to open a line of credit based on financial history, credit score, and level of income. Before opening a credit card, an agent will analyze your debt-to-income ratio to see if you can be trusted with having a new line of credit. Your credit score also plays a vital role when qualifying for a credit card. If you’ve endured one emergency after the next, you likely sought financial relief by swiping your credit card when in a pinch. Unfortunately, repeated credit card purchases will increase your utilization rate. As a result, high credit utilization significantly decreases your credit score over time. Credit card companies are unlikely to approve a borrower for a new credit card if they currently have astronomical credit card debt. 

Personal Loans 

Just like with credit cards, applying for a personal loan requires you to have satisfactory credit and a pleasing financial history. If you have past bankruptcies or evictions, it is often unlikely that you would be approved for a personal bank loan. 

Many finance options require satisfactory credit history, as it can reduce the lending risk. A credit score simply tells a lender how trustworthy you are with money. Title loans reduce risks by allowing borrowers to leverage their vehicles as collateral in exchange for quick funding.1 Borrowers with enough vehicle equity could potentially be approved for a title loan.1

  • Vehicle Equity: Your car’s equity is determined by calculating the amount of money you still owe on it,  and the current market value of your vehicle. 
  • Negative Equity: Negative equity is when your vehicle is worth less than the amount you currently owe on it. 
  • Positive Equity: Positive equity is when the market value of your vehicle is more than the amount you currently owe on it (if at all). 
  • Market Value: Market value is the amount of money a consumer would pay a dealer for a vehicle. A few things that contribute to the market value of a car are the make and model, the year of the vehicle, and the condition of the vehicle. 

The amount of money a borrower could potentially qualify for is based on a percentage of the borrower’s equity in their vehicle.1 But, if you want to apply for a title loan, you may be thinking- “Can I use my car as collateral for a loan if I still owe on it?” Keep reading to learn more! 

What are the Requirements of a Collateral-Based Loan? 

Just like with any loan, there are a few initial requirements borrowers must meet. Below are a few. 

  • 18 Years of Age or Older: When qualifying for a title loan, borrowers must legally be considered adults. Qualifying for a title loan is a significant responsibility and should be reserved for adults only. 
  • Vehicle Title: Borrowers must possess their vehicle’s title at the time they inquire about a title loan. If you are not the current titleholder of your vehicle, visit your local DMV to fill out a transfer request form. If your car is close to being paid off, you may still be able to qualify for a title loan.1
  • Qualifying Vehicle: Does your vehicle have enough positive equity? Remember, the amount of money you could potentially qualify for largely depends on the amount of equity in your vehicle.1 If you are still unsure, plug in your car’s details into this loan calculator for an estimate on how much you could potentially be approved for.
  • Consistent Income: How often do you get paid? Do you have a consistent income source? One of the qualifying factors in title loan approval is a borrower’s ability to repay the loan.
  • A Valid State or Government-Issued ID: You must present a valid, government-issued ID at the time of inquiry for a title loan. This could be a driver’s license, passport, or even a military ID.

Before inquiring about a title loan, go over this list and make sure you meet all of the requirements in order to receive the best results.1


If My Credit Score is Below 600, Can I Use My Car As Collateral for a Title Loan? 

How is your credit score? You may be thinking, “If my credit score is below 600, can I use my car as collateral for a loan if I still owe on it?” Title loans could potentially be a good loan option for borrowers who have less than stellar credit. Life happens, and it can be challenging to have a blemish-free financial record. There are several reasons why someone may have less than perfect credit. Below are just a few scenarios that can affect a borrower’s financial history. 

High Credit Utilization

You’ve been out of work for months, and it feels like every time there is light at the end of the tunnel, you experience another downfall. You get a call for an interview, and you believe the meeting goes well. A week later, you get an email saying, “Thank you for your interest in the position, but at this time, we have moved forward with other candidates.” As you’re looking for work, bills keep coming in. Until you can finally lock in a job, you’re exhausting your credit limit by making rent payments, putting food on the table, and driving to interviews that end up feeling like a waste of time. Even if you have high credit utilization, you may still be able to apply for a title loan.1 

Late Payments

Have you been in a situation where you were late paying a bill? Delinquent payments that occur 30 days after a bill’s due date will likely appear on your credit report. The worst part: it can stay on your credit report for up to seven years. Past mistakes shouldn’t keep you from applying for a loan! 

Past Evictions

When you lived in your first apartment, you initially bit off more than you could chew. You were so ready to get out of your parents’ house that you got your first apartment before understanding how expensive it would be. Your entry-level job wasn’t enough to cover your living expenses, so, unfortunately, you were evicted. Past evictions can wreak havoc on your credit report. 

ChoiceCash Title Loans serviced by LoanMart could potentially be a good fit for borrowers who have compromising credit reports and less than satisfactory credit scores

Do I Need to Have a Job to Use My Car As Collateral For a Loan While Still Owing On it? 

Using your car as collateral for a loan while still owing on it is possible if you have a steady income source. One of the determining factors in title loan approval is your ability to repay the loan.1 Take a look at your income. Are you paid monthly, bi-weekly, or do you receive a check every week? If you do not currently have a traditional 9 to 5, don’t worry, there are alternatives to showing proof of income. Below are a few circumstances where you could still potentially qualify for a title loan with your income.1


Being self-employed has been the best decision you ever made. You’ve invested a considerable amount of money in your start-up business, and now, you need extra cash to help keep the lights on in your home. With loan options like ChoiceCash Title Loans, potential borrowers can send in bank statements as proof of income. So, if you are a small business owner, feel free to send in your recent bank statements as proof of income when applying for a title loan. 


Collecting disability checks could qualify as proof of income. Ask a title loan agent if your checks qualify by calling 855-277-4847

Child Support

Being a parent is not easy. Children come with a multitude of immediate demands and financial planning. They grow out of their school clothes at exponential rates. When they are teenagers, they eat you out of a house and home. Children are expensive, and it often takes more than one income to provide for them. Do you collect court-ordered child support? If so, you may be able to use child support as proof of income when qualifying for a title loan.1 


Separating from your spouse is probably the hardest decision you ever had to make. Separation is not only hurtful to you, but it affects the kids, your relationship with your in-laws, and your financial security. Separations can be stressful! Fortunately,  potential borrowers can send in their spousal support check stubs as proof of income. 

Social Security Income/Pension Income

You are 68 and living your best life. You can’t remember the last time you had to clock in, or put on a uniform to go to work. You’re in the middle of planning your annual trip to the Bahamas, and you’re considering using a title loan to help pay for some of your expenses. Retirees can send evidence of their Social Security check or pension as proof of income. 

If you’re interested in taking out a title loan, you do not need to have a 9 to 5. As long as you are able to show proof of consistent income, you could potentially qualify for a title loan.1 

Your monthly income is important when qualifying for a title loan, because you must be able to make on-time payments during the repayment period. Repaying a title loan will require intentional financial planning. Below are a few tips that could help you stay on track.

  1. Choose the Best Time of Month: Your first payment will be due approximately 30 days after receiving your emergency funds.1 If you get paid twice a month, it may be a good idea to use the check you receive in the middle of the month to allocate toward your loan repayment. Most people use their paycheck near the first of the month for rent and utilities. It’s more likely for you to have wiggle room in your budget during the middle of the month. 
  2. Understand What You’re Paying: When you repay your loan, you will be repaying the loan amount plus interest. The loan amount is the amount of money you receive when qualifying for the title loan. This number is usually a percentage of your car’s available equity. Interest is the amount of money it costs to borrow the money in the first place. Take a look at your finances, and financially prepare for your title loan repayment plan. 
  3. Speak to a Professional: New borrowers make the mistake of not asking the right questions and not consulting an expert. If this is your first time taking out a title loan, call to speak with a loan agent today at 855-277-4847. Below are a few questions you should ask your loan agent.
    • How much could I potentially be approved for?
    • What day will my repayment plan start? 
    • What happens if I neglect to make a payment?
    • Am I allowed to pay early?
    • How long will it take for me to repay the loan? 

Do I Need to Go Through a Vehicle Inspection to Qualify for a Car Title Loan?

Do you still owe on your vehicle and want to use it as collateral for a loan? You may be wondering if you should get your car inspected first. Put your phone down; you won’t have to call a mechanic for a vehicle inspection when applying for a title loan. With loan options like ChoiceCash, you can simply send in photos of the vehicle so that a title loan representative can perform a virtual inspection. You will need to send in a photo of your vehicle’s odometer, Vehicle Identification Number, and the photos of the exterior of your vehicle. In addition to sending in photos of your vehicle, there are a few more documents you will need to send in when applying for a title loan. 

  • Proof of income
  • Valid, government-issued photo identification
  • Proof of address
  • Vehicle title 
  • References: these can be professional or personal references. 

Are you ready to get started? Apply for a title loan today by calling 855-277-4847. If you’re already on your laptop, visit us online to begin the process. Don’t allow your emergency to induce unnecessary stress, click here to apply for a title loan today.

Frequently Asked Questions:

Applying for a collateral-based loan can be a simple process. You must be an adult at least 18 years of age, have a qualifying vehicle title in your name, and show proof of a steady or alternative income.

You can use your car for a title loan even if you’re still making payments on your vehicle. Lenders will have you sign an authorization form allowing them to obtain information and pay the remainder of the auto loan themselves.

Collateral-based loans can be a great resource for people with poor credit scores. Since collateral is used during approval, the lending risk is minimzied if an applicant does not have a strong credit history.

A collateral-based loan, also known as a secured loan, uses physical property as collateral in exchange for funding. Unsecured loans do not rely on assets– instead, lenders solely look at a person’s credit score when determining an applicant’s eligibility.

The main risk with a collateral-based title loan is car repossession by the lender. If you fail to make your monthly payments, lenders have the legal right to take your car and sell it for profit after a certain amount of time.