How Much Can You Borrow Against Your Car Title?

MoneyA car title loan is a secured loan in which a vehicle is used as collateral. A borrower can obtain access to money based on the value of his or her vehicle. How much can one actually borrow? That is a great question and varies depending upon the borrower.

 

Applying for a Car Title Loan

 

When applying for a car title loan at Embassy Loans, an individual must first fill out an application. The applicant must present proof of their identity as well as prove that they have the title to the car or truck. The loan process is easiest when the title is free and clear of any liens. If the car is completely paid off, the loan will be processed more quickly. It is still possible to borrow on a vehicle that has a balance remaining on a car loan.

 

Blue Book Value

 

Once you have submitted the proper paperwork, the loan amount will depend on the value of your vehicle. Before you approach a lender like Embassy Loans, you should get an idea of what your car or truck is worth. You can do this very easily with the Kelley Blue Book, or KBB. The KBB is a popular resource that is used all over the nation to estimate the value of vehicles. You can find this resource online, and you will find that it is easy to use.

 

You will enter the make, model, and year of your vehicle first. The online tool then allows you to put in all of your vehicle’s options – ABS, air conditioning, etc. – to come up with an estimated value. You will report the condition of the vehicle as well – excellent, good, fair, or poor – and this plays a role in the final estimated value.

 

How Much You Can Actually Borrow

 

Knowing the value of your vehicle will help, but keep in mind that you will not be able to borrow the entire amount that your car is worth. Most lenders will only offer you between 30 and 50 percent of the value of the vehicle. This protects the lender in case a borrower defaults on the loan. For a vehicle valued at $15,000, a lender may allow a loan of $7,500 (assuming the car is owned free and clear). If the borrower fails to repay, the lender can take possession of the car and then sell it to recover its losses. With a car valued at $15,000, a lender has some flexibility in recouping the $7,500 that it lost.