Twenty-five percent of borrowers take out title loans to cover emergency expenses. Whether facing a crisis or in need of some cash on hand, borrowers tend to be interested in how much money they can take out via a vehicle title loan.
But there are few hard and fast rules on how much money a borrower can access. Instead, lender policies place limits, vehicle values, and borrowers’ ability to pay the loan back. Keep reading to learn how the process works and what every borrower should know when applying for a loan.
Auto Title Loan Minimums And Maximums
As a general rule, car title loan lenders will loan as low as $1,750. That is ideal for borrowers with small cash flow needs, as it allows them to take out only what they require and minimizes what they need to repay. Borrowers with higher cash needs may be eligible to receive up to $50,000. On average, lenders allow borrowers to take out loans equal to between 25 and 50 percent of a vehicle’s value.
Determining How Much Money A Vehicle Can Secure
Car worth and loan potential are affected by a variety of factors including, a vehicle’s:
- Make and model
- Title type
Standardized pricing estimates such as those provided by Edmunds or Kelly Blue Book also play a role.
Make and Model
Luxury cars command higher prices than budget models in the new and used car markets. As such, they also tend to qualify owners for larger car title loans.
Even older models often retain their value, giving their owners the option to take out sizable loans. That is especially true of models with extensive or desirable features and upgrades.
Budget vehicles have lower intrinsic values and are less likely to provide owners with the option to take out huge loans. That said, many popular makes and models retain their value well. Even an “average” car can offer a borrower the chance to take out $15,000 or $20,000 in loan funding.
Vehicles face drops in value in the first five years of their lives. New cars can lose up to 11 percent of their value the instant owners drive them off the dealer’s lot. They can lose another 10 percent in the first year and between 15 and 25 percent each year for the next four years. By the five-year mark, vehicles will be worth an average of 60 percent less than their original selling price.
That isn’t universally true, however. Some vehicles hold their value tenaciously due to popularity, durability, and other factors. As such, a borrower should not make assumptions about the cost of their car. They would do better to contact a lender for a proper assessment of their vehicles’ values.
Many borrowers are surprised to learn just how much they can borrow against their cars.
A vehicle’s condition also plays a deciding role in its value as collateral. Poorly maintained cars are:
- More likely to suffer breakdowns or need work
- More likely to suddenly lose cost as the result of such breakdowns
- Worth much less as collateral than vehicles in good repair
That is why lenders do a visual inspection of each vehicle before providing borrowers with a vehicle title loan on it. Even cosmetic damage such as dents, scrapes, and interior stains can lower value.
Borrowers interested in the possibility of applying for a title loan should make an effort to keep their vehicles clean and properly maintained. That will maximize the amount of money they can borrow against it.
Like age and condition, vehicle milage can influence value. High-mileage vehicles tend to be worth less than low-mileage ones. As with age, however, not all cars depreciate equally based on mileage.
“Clear” titles show that borrowers who have sole ownership of a vehicle hold the most value. They will result in the highest possible financing options for owners. “Clean” titles indicate that cars are in good condition but that there is already a lienholder. That is usually the loan agency used to take out their original car loan when purchasing the vehicle.
Thus, the closer a borrower is to pay off their car, the more money they will likely have available. As a rule, vehicles with salvage titles cannot secure loans.
A Word On How Much Money You Can Get For Alternative Vehicles
Borrowers can use alternative vehicles such as RVs, semis, and motorcycles to secure a vehicle title loan. However, slightly different rules may apply. Despite that, these alternative vehicles can be an ideal option for borrowers. That is because they are rarely borrowers’ primary vehicles.
Therefore, some borrowers feel more comfortable placing them “at-risk” by using them as collateral than they would be using their family’s vehicle or a vehicle they need to do their job. That is particularly true for borrowers only seeking to take out small loans for which an alternative vehicle is more than enough.
Ability To Repay
The final factor in loan availability is borrowers’ ability to repay their loans. In addition to vehicle value and financial needs, borrowers should take into account:
- Their loan term
- Interest rates
- Their anticipated income
- Credit score
That will help them determine the best amount to borrow. That, in turn:
- Minimizes their risk of being unable to repay the loan on time
- Minimizes the total amount they will owe at repayment
- Help them determine which vehicle to use as collateral
- Provides confidence and peace of mind at every step of the transaction
Get A Quote To Find Out How Much Money You Can Get with A Car Title Loan
Contact us today for an online vehicle title loan quote or browse our blog to learn more about title loans and vehicle valuation.