4 Alternatives Way Cheaper Than Auto Title Loans

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If you’re in the middle of a financial emergency, you’re not just concerned about paying an unexpected expense. You’re also worried about how that expense will hurt your chances of putting food on the table or making your next rent payment.

If you have bad credit, auto title loans are a way to get quick cash when you need it. But with predatory fees and high interest rates (not to mention the chance of losing your car), auto title loans are almost always more trouble than they’re worth. Here’s why.

How do auto title loans work?

Borrowers who are looking to get cash fast can head to a local lender with their car and title in hand. Lenders require that you own the car outright, so it won’t work if you’re still making payments on the car.

The lender appraises the car and makes a loan offer, typically 25 percent to 50 percent of the appraisal value.

If you complete the application for an auto title loan and get approved, you leave the title with the lender as collateral. Then you walk out the door with a check and typically have 15 to 30 days to repay the loan in full. Some auto title loans are repayable in installments, however.

In the event that you don’t pay back your auto title loan, the lender can repossess your car and sell it to pay off the debt you owe. What’s worse, in some states, if the lender gets more from the sale of the car than the amount you owe, it isn’t required to pay you the difference.

High interest rates lock you into a cycle of debt

Although APRs for auto title loans aren’t as high as APRs for payday loans, high interest rates and fees can result in triple-digit APRs. That’s why it’s no surprise the Consumer Financial Protection Bureau (CFPB) found the following in a recent study about auto title loans:

  • Eighty-eight percent of single-payment auto title loans aren’t repaid on time. To avoid repossession, most borrowers take out a new loan to pay off what’s due on the auto title loan.
  • More than half of those who reborrow end up taking out four consecutive loans or more. Additionally, two-thirds of all auto title loans go to customers who reborrow six times or more.
  • Twenty percent of borrowers who can’t repay their single-payment loan on time lose their car to repossession.

In other words, the cards are stacked against you from the get-go.

New regulations offer some protection against auto title loans

The main reason borrowers get sucked into long-term debt with auto title loans is lenders haven’t required borrowers to prove they can afford to repay the debt.

The CFPB solved that problem in part when it issued a final rule in October 2017. The rule applies to certain auto title loans with repayment terms up to 45 days and requires lenders to:

  • Assess the borrower’s ability to repay the loan (previously, no proof of income was required)
  • Offer smaller subsequent loans
  • Restrict total indebtedness to 90 days

With the new rule in place, it should become harder to get approved for an auto title loan if you can’t afford the payments. Although that means your options are even more limited now, it can prevent your financial situation from getting worse.

The rule doesn’t apply to auto title loans with repayment periods longer than 45 days, however. So, auto title loans with an installment repayment plan won’t be affected.

4 cheaper alternatives to auto title loans

When you need cash now, the conventional advice to cut back on expenses and save doesn’t provide immediate relief.

If you have bad credit, there are several ways to get the cash you need without putting yourself in a precarious position. To avoid getting sucked into a vicious cycle of crippling debt, here are four ways to get quick cash.

1. Sell some of your possessions

If you have stuff you no longer use or need lying around, consider putting it up for sale on Craigslist or Facebook Marketplace. Selling old cellphones, unused gift cards, and items sitting in storage can help you rack up extra cash fast.

2. Get paid for extra work today

Companies such as LaborWorks, Labor Finders, and PeopleReady can help you find day laborer jobs that pay at the end of the day or week. If these companies aren’t available in your area, check out the gigs section on Craigslist to find opportunities nearby.

If you already have a day job, consider asking your employer for an advance on your paycheck. If that doesn’t work, Earnin might be able to help.

Earnin offers payroll cash advances for work you’ve already done but haven’t been paid for yet. You repay the advance when you receive your next paycheck. And here’s the best part: You don’t have to pay fees or interest. The company simply asks that you pay what you think is fair for the advance.

3. Ask for help

If you have family members or friends who can spot you some cash, don’t be afraid to ask. But keep in mind that a bad exchange can damage your relationship, so avoid taking advantage of them.

You also can reach out to creditors to see if you can get a forbearance on your bills for a few months. Then you can take the cash you would’ve used to make your monthly payments and put it toward your emergency expense.

4. Consider a personal loan

You might think personal loans require a good credit score, but some companies specialize in personal loans for people with bad credit.

For example, Avant has a minimum credit score of 580, and OneMain Financial doesn’t have a minimum credit score. The interest rates for these loans can be high but nowhere near as high as interest rates for auto title loans. Also, their repayment terms are more flexible, giving you more than a month or two to pay off the loan.

Just be sure to do your research so you know what you’re getting yourself into.

Avoid auto title loans at all costs

With so many other ways to get cash fast, most people shouldn’t even consider auto title loans as a last resort. As the data shows, the predatory nature of these loans puts many consumers in a worse financial position than they were in previously.

If you’re already stuck in the vicious cycle of debt these loans create, consider using one of the alternatives above to pay off your debt so you can get back on track.

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

RATES (APR)loan amount
5.99% – 17.88%1 $5,000 to $100,000
5.69% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 17.88% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 4, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
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  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

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