Home Before You Get a Title Loan: What You Need to Know
Before You Get a Title Loan: What You Need to Know
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This is a short, clear, and fully transparent guide. We encourage every borrower to read it before deciding to get a title loan. It will help you understand the terms, costs, process, and alternatives related to this type of loan.
What Is a Title Loan?
A title loan is a type of secured loan where you use your vehicle as collateral. You hand over your car title to the lender. You keep driving your car while you make payments. Once you pay off the loan in full, you get your title back.
If you stop making payments: The lender can repossess your car and sell it to recover the money you owe. To understand the full process, see legal right to repossess your car.
The True Cost
Title loans have high interest rates. According to the Federal Trade Commission (FTC), title loans often have monthly finance fees as high as 25%, which translates to an APR of about 300%.
| Industry Average | Montana Capital® |
|---|---|
| About 300% APR | 60% to 175% APR |
| Often 15-30 day terms | Up to 36 month terms |
Source: FTC Consumer Advice
Example of What You May Pay Back:
| If you borrow: | APR: | You could pay back: |
|---|---|---|
| $1,000 | 60% – 175% | $1,600 to $2,750 or more |
| $5,000 | 60% – 175% | $8,000 to $13,750 or more |
Use our title loan calculator to see what your loan would cost.
Our Recommendations
Consider lower-cost options first. We encourage you to look for alternatives that may be more suitable for your needs before you apply. The FTC suggests these options may cost less:
- Ask your creditors for more time or a payment plan
- Credit union loans (often much lower rates)
- Ask family or friends for help
- Local charities and churches
- Free credit counseling at nfcc.org
Borrow only what you truly need. Take only the amount you must have for your emergency. The more you borrow, the more you pay in interest. A smaller loan means lower costs and easier payments.
Pay back early to save money. We encourage you to pay back your loan as soon as possible, even before your contract end date. The faster you pay, the less interest you pay. There is no penalty for paying early.
Speak with a financial advisor. A professional can help you understand all your options and what is best for your situation.
When a Title Loan May Make Sense
A title loan may be appropriate if ALL of these are true:
- You have a true emergency and no other options
- You have a reliable, steady income source to repay your loan, such as:
- Employment wages or salary
- Self-employment income
- Social Security benefits
- Disability income
- Retirement or pension payments
- Rental income
- You can pay the monthly payment AND your other bills
- You have a plan to pay off the loan quickly
- You could manage if you lost your car (worst case)
When a Title Loan May NOT Be Right for You
- The payment would make it hard to pay rent or buy food
- You need the money for regular bills (not a one-time emergency)
- You must have your car to get to work
- You are not sure how you will repay the loan
- You already have a title loan you are struggling to pay
What Happens If You Cannot Pay
If you miss payments:
- We will contact you to try to work out a plan
- If we cannot work it out, we can repossess your car
- We may sell your car to recover the money you owe
- You may still owe money if the car sells for less than your balance
Having trouble making payments? Call us right away at 818-503-9393. We may be able to find a solution to help you avoid late fees and additional charges.
Your Rights
- 3-day cancellation: In many states, you can cancel within 3 business days after signing your title loan contract and return the money
- No prepayment penalty: You can pay off your loan early without extra fees
- Clear terms: We must explain all costs before you sign your title loan contract
- Military families: The Military Lending Act limits rates to 36% APR for servicemembers and dependents
State Laws Are Different
Title loan laws are different in each state. Rates, terms, and your rights may vary based on where you live. We encourage you to review the rules for your state before you apply.
See your state disclosures and our legal disclaimer for more information. You can verify lender licenses at NMLS Consumer Access.
Ask Yourself: Is a Title Loan Right for You?
Before applying for a title loan, be honest with yourself about these questions:
- Can I really afford the monthly payment?
- Do I understand how much I will pay back in total?
- Have I tried other options first?
- What will I do if I cannot make a payment?
- Can my family manage if we lose the car?
Responsible borrowing: Take your time. Even in an emergency, a few extra minutes to think can help you make the right choice for your family.
Questions?
General Support: support@montanacapital.com | 1-888-700-8900
Legal Inquiries: legal@montanacapital.com
Mailing Address: 12100 Wilshire Blvd, Suite 800, Los Angeles, CA 90025
Hours: Monday-Friday 9am-7pm PT, Saturday 10am-4pm PT
Visit: montanacapital.com
File a Complaint: Contact us directly, visit the CFPB Complaint Portal, or reach your state regulator.
Montana Capital Car Title Loans® | Simple Cash Loans, Inc.
NMLS ID: 2249848 | CA License: 603F508
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