CFPB Won't Prioritize Enforcing Payday Loan Payment Rule
The Consumer Financial Protection Bureau said it will not prioritize enforcing two key parts of its payday lending rule, easing pressure on short-term lenders.
Guide
Title Loans
Coverage of car-title loans — short-term loans secured by a vehicle title — their costs, repossession risks, and the state rules that govern them.
A car-title loan (or "title loan") is a short-term, high-cost loan secured by the title to your vehicle. You hand over your car's title in exchange for cash and keep driving while you repay. The amount is usually a fraction of the car's value, due in 15 to 30 days, and carries a triple-digit APR.
This guide explains how title loans work, what they cost, the repossession risk that sets them apart from a payday loan, and where they are legal. The Payday Loan Times is an independent news archive; we are not a lender and do not arrange loans, and nothing here is financial advice.
How a car-title loan works
- The lender appraises your vehicle and lends a percentage of its value — often 25%–50%.
- You give up the title (and sometimes a spare key) but keep the car during the loan.
- Repayment is typically due in one lump sum in 15–30 days, fee included.
- If you cannot pay, the loan may be "rolled over" into a new term for another fee — or the lender can repossess the vehicle.
What title loans cost
Title-loan fees are commonly quoted as a monthly charge of about 25% of the amount borrowed. A 25% fee on a 30-day loan works out to an APR of roughly 300%. Borrow $1,000 and you owe about $1,250 a month later — and far more if you renew.
| Monthly fee | Term | Approx. APR |
|---|---|---|
| 20% | 30 days | ~240% |
| 25% | 30 days | ~300% |
| 30% | 30 days | ~360% |
The repossession risk
Unlike a payday loan, a title loan puts your car on the line. Research by the Center for Responsible Lending found that most title-loan borrowers struggle to repay on schedule, and a meaningful share end up losing the vehicle. Because a repossessed car is often worth many times the loan, borrowers can lose an asset far more valuable than what they borrowed — see our report on illegal car-title lending in 22 states.
Where title loans are legal
Title lending is governed mainly by state law: some states allow it, some cap rates, and others ban it. Browse our state-by-state coverage:
Title loans vs. payday and installment loans
A title loan is secured by your vehicle; a payday loan is unsecured but due on your next payday; an installment loan is repaid over months in scheduled payments. All three can carry very high APRs, but only the title loan risks repossession of your car.
Alternatives to a title loan
- A small loan or payday-alternative loan (PAL) from a credit union.
- A payment plan or hardship arrangement with the biller you are trying to pay.
- Non-profit credit counseling, or local emergency-assistance programs.
- Selling or borrowing against the car through a lower-cost lender instead.
Latest Title Loans news
Report: Car-Title Lenders Operating Illegally in 22 States
Car-title lenders are doing business in 22 states and the District of Columbia that prohibit the loans , according to a Center for Responsible Lending research brief released…
Frequently asked
What APR do car-title loans charge?
A common monthly fee of about 25% on a 30-day loan is roughly a 300% APR. Renewing the loan multiplies the cost.
Can the lender take my car?
Yes. A title loan is secured by your vehicle, so a lender can repossess the car if you default, subject to your state's rules.
How much can I borrow with a title loan?
Usually a fraction of the vehicle's value — often 25%–50% — and limited by state law where caps apply.
Do title lenders check credit?
Often not. Approval typically rests on the car's value and your ability to repay, not your credit score.
Are title loans legal everywhere?
No. Some states permit them, some cap rates, and others prohibit them outright. Use the state list above to check coverage for your state.