Car Title Loans vs Registration Loans: Pros and Cons

LOS ANGELES – July 12, 2021 – (

If you need the extra cash quickly and you own a vehicle, two great options to consider are car title loans and registration loans. Both involve using certain aspects of your vehicle to borrow money, and both allow you to keep your car while paying off the loan, but there are a few differences in how they work. So, one loan option may be better than the other, depending on your situation. With that in mind, read on to find out the differences between car title and registration loans and compare their pros and cons.

What is a title loan?

A car title loan uses your vehicle as collateral to secure the loan. Most title lenders require you to own your car for approval. The title loan amounts are generally based on the value of your vehicle, which the lender will determine during the application process. Once approved, you will physically return your title to the lender in exchange for your loan amount. You can continue to drive the vehicle while you pay off the loan.

What is an enrollment loan?

A registration loan does not use your car as collateral. Instead, you use the vehicle registration. For this reason, you may be able to get a loan without owning the car. Lenders consider the value of your vehicle as well as your income when determining the loan amount. And, just like with securities lending, you can continue to drive your car while you pay off.

Advantages and disadvantages of securities lending

1. Large loan amounts

Title loans offer larger borrowing limits since you must own the car. You may be able to guarantee up to 50% of the value of your vehicle.

2. Lower interest rates

Auto title loans generally have lower interest rates than car title loans. This is because registration loans do not use your car as collateral so they are considered riskier for lenders.

Disadvantages of Title Loans

1. Requires full ownership of the car

You can only get a title loan if you own your car. If you still have an outstanding auto loan, you will likely be turned down.

2. Risk of repossession

If you default on a title loan, the lender has the right to repossess your car, leaving you without a vehicle.

Benefits of registration loans

1. Full ownership not required

You can get a registration loan without owning your car, which makes it more accessible.

2. Less risk of rework

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Since the vehicle itself is not collateral, the lender cannot repossess your car if you do not pay off the loan.

Disadvantages of registration loans

1. Higher interest rates

Registration loans can have higher interest rates than title loans because they do not involve the use of your car as collateral.

2. Lower loan limits

Since you can get a registration loan without owning the car, the borrowing limit may be lower than that of a title loan.

3. Other default risks

The lender may not be able to repossess your car if you default, but they may send your account to collections or sue you for the remaining balance.

The bottom line

Either loan could be a good option if you need cash quickly. If you own your car and need more funds, a title loan might be the right choice. And if you don’t own your vehicle and agree to a smaller loan amount, you may want to consider getting a registration loan. Whichever loan you choose, make sure you pay it back on time to avoid repossession or other problems.

Notice: The information provided in this article is for informational purposes only. Consult your financial advisor about your financial situation.

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Car Title Loans vs Registration Loans: Pros and Cons

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