Yes, you can use your car as collateral for a loan if it has equity and you have the ability to repay it. If you accept the loan offer, you will exchange your car’s title for the loan amount while still driving your vehicle.

You should use secured loans only if you have a poor credit score and a financial emergency. Once you get a title loan on your car the risk of losing your car is high if you default on your loan payments.

Title loans with Montana Capital Car Title Loans are a great option for those experiencing financial hardship. You can typically get up to $50,000 within 24 hours and keep driving your car, even if you have bad credit. While credit history is helpful, it may not be a determining factor in loan approval. We also review your ability to repay the loan and the vehicle value. 

What Is Collateral?

So what exactly are collateral title loans?

It is a type of loan in which collateral is provided in the form of an asset. 

Potential borrowers must own a car outright and sign the title over to an auto loan title company, which means they have to pledge an asset, or collateral, as security.

Montana Capital Car Title Loans will lend you up to 70% of the car’s total value and keep the title as collateral in case you cannot make your monthly payments.

If the borrower fails to repay the loan, the lender may sell the car to recoup their losses.

Tip: You Can Still Use the Vehicle

When you borrow from Montana Capital, we keep the car’s title, but you keep the vehicle. So you’re free to use it while making your payments. The only time you risk losing your car is if you default on your car title loan.
We encourage you to use title loans only for immediate cash needs, not be a long-term solution.

How Will a Collateral Loan Work?

To use your car as collateral with Montana Capital, we must first evaluate that you’re capable of repaying your title loan. Getting a loan with no income is unlikely. We then determine your car value based on its age, make/model, and depreciation because we use car equity as collateral when providing an auto title loan.
Many times this can be done online with pictures of the car; other times, you must visit a local branch to get the car appraised.

All of these factors are used to determine the loan amount you’re offered if approved. Once you accept the loan offer, you will give us the title to your car as collateral in exchange for the loan amount while still driving your vehicle.

What Happens When I Use My Car as Collateral?

After proving you can pay back your title loan and providing the required documentation, you will receive the funds and can keep driving your car if approved. However, you cannot sell the vehicle until the title loan is paid off; your registration will state there is a lien on it.

When you use your car as collateral for an auto equity loan, you run the risk of defaulting on the loan. If you end up defaulting on your title loan, your vehicle can be repossessed. So if you have trouble making your payments or are experiencing a financial emergency, speak with your lender to work out a plan to get you back on track or revise your loan terms.

Both you and your lender have a vested interest in working out a solution; you get to keep your vehicle, and your lender doesn’t risk losing money on the loan by resorting to repossession.

How to Apply for a Title Loan and What Is Needed

To see if you qualify for a car title loan with Montana Capital, fill out our simple and easy application and receive a decision quickly!

Apply online or by phone (1-800-700-8900)

In your application, you will provide your vehicle’s make, model, VIN #, and mileage, as well as answer questions regarding how much you are looking to borrow, your location, credit, and basic contact information.

Provide required documents

You will be responsible for providing proof of income to show that you can repay your loan, proof that the title is lien-free and in your name, photo identification, and pictures of your vehicle.

Receive your cash

Borrowers can receive their funds in as little as 24 hours!

Benefits of Using a Car as Collateral for a Loan

When you use your car as collateral, you may realize the following benefits:

  • You may get funds same-day
  • It takes only a few minutes to apply
  • You can drive your car as normal
  • Your credit history alone doesn’t determine your eligibility
  • Auto equity loans aren’t typically reported to the credit bureaus

Drawbacks to Using a Car as Collateral for a Loan

There are some drawbacks to using your car as collateral too:

9 Need-To-Know Facts About Using a Car as Collateral for an Auto Equity Loan

Tip 1: 70% Borrowing Power

Car title loans may allow car owners to borrow up to 70% of the car’s estimated value. In exchange, you must turn the vehicle’s title over to Montana Capital to hold as collateral.

Tip 2: Reliable Source of Income

Ensuring you can afford the loan is one of the most important approval criteria at Montana Capital. We do this by confirming your source of income. It can be employment income, Social Security, disability, unemployment, investment income, and more.

Tip 3: Good Credit Not Required

Montana Capital Car Title Loans doesn’t require perfect credit. You can apply with any type of credit, including no credit history. While you may still need a credit check, it won’t necessarily affect your chances of approval.

Tip 4: Good Option if You Need Money Immediately

Car title loans may help you get money fast. Once we agree on the loan amount and terms, you can receive your cash. In addition, some borrowers can leave the lender’s office with their money on the day they apply for the loan. This can be crucial in times of financial crisis.

Tip 5: Quick Process

Because you use the car as collateral, the approval process is quick, even if you have bad credit.

As a result, the loan approval process is usually much faster than most other loans, giving you access to the funds much quicker. If approved, you may be able to receive your money in as little as 24 hours.

Tip 6: High-Stakes

Car title loans are riskier than other types of loans because the term is short and the interest rates are high, not to mention you’re risking your car. Falling behind on one payment can quickly escalate into more significant financial troubles.

Be mindful to only use title loans as a short-term solution for financial emergencies.

Tip 7: Risk

If you can’t repay the loan on time, you can struggle with the accumulated interest and fees. Don’t hesitate to reach out to your lender to keep them informed and work out a revised repayment plan.

Tip 8: Potential Repossession

Since your car is the collateral, you risk losing it. One in five borrowers lose their car to repossession. This is the only scenario where you’d lose the use of the car.

Tip 9: Not Available Everywhere

Title loans aren’t available in every state; in 25 states, they are illegal, requiring you to use other secured loans.

Other Collateral You Can Use for Loans

Other collateral accepted for secured auto title loans include RVs, boats, motorcycles, and trucks. The process works the same as a car title loan. You must own the vehicle without any current financing and give up the title of the vehicle to borrow money from it.

You must keep possession of the vehicle until you pay the short-term loan off, and then you are free to sell it.

Types of Secured Loan You Can Apply For Using a Car as Collateral

As we mentioned above, car title loans require your vehicle as collateral, but they aren’t the only types that do. While most personal loans are unsecured, some secured personal loans do exist. Additionally, if you are looking for business financing, your business loan will likely require collateral. This can take the form of a company car or work vehicle.

As a company owner, you can use your company vehicles for title loans. Whether you need funding for a positive flow of cash, to lower your credit card debt, or to take on more staff, title loans could be a viable solution.

A secured loan appeals to many because it typically offers a higher approval rate than an unsecured personal loan.

Vehicle Collateral Loan FAQs

What Cannot Be Used as Collateral for a Loan?

How Much Cash Can I Get With a Car Collateral Loan?

The Bottom Line

Using a car as collateral for a loan is fairly commonplace if you have a poor credit score. Secured loans require an asset to back the loan and protect the lender in case of default, and cars fit the bill!

At Montana Capital, title loans are available using your lien-free title as collateral, even if you have bad credit. If you are experiencing a financial emergency, a car title loan with us may help you get fast cash – in as little as 24 hours! 

While this same-day funding is possible in certain situations, and borrowers may receive up to 70% of their car’s value, title loans should only be used as a short-term solution in the event of a financial emergency. For long-term financial difficulties, we encourage you to speak with a financial advisor or other professional to help get your finances back on track.

If you’re looking for title loans and want to work with Montana Capital Car Title Loans – Apply online: It’s fast, secure & free!

Written by Samantha Hawrylack

Written by

Samantha Hawrylack

Samantha Hawrylack writes for our company and is an expert in personal finance. Sam received her Bachelors of Science in Finance and her Masters in Business Administration from West Chester University of Pennsylvania. She began her career in the financial services industry and shifted to an entrepreneurial role where she could directly impact clients. Sam has an impressive background in personal finance and business management.