Key Takeaways:

  • Not everyone gets approved for a title loan, even if they own a car
  • Liens on the title are a common reason for title loan denial
  • Not all states allow title loans, and there’s no way around it
  • You must have adequate income to qualify for a title loan

Car title loans may be a lifeline in a financial emergency, but not everyone gets approved. Understanding what disqualifies an applicant for a car title loan helps ensure you meet the necessary requirements, should you need to borrow money.

Unlike standard personal loans, title loan requirements are more flexible. They leverage the collateral of your car, allowing you to borrow against its equity. Many title loan providers permit borrowers to access up to 70% of the vehicle’s value, even if you have no other loans.

The good news is that most lenders don’t require good or even fair credit. While they look at your credit history, it isn’t the main factor they consider for this secured loan. Learn the top reasons title loan applications get denied to help you understand if you’d be a good candidate for one.

Top Reasons Car Title Loan Applications Get Denied

Every lender has different requirements, but overall, here are the main reasons title loan providers decline applications:

  • Low car value: You must keep some of the equity in your car untouched. A title lender may decline your application if your car isn’t worth enough to borrow against.
  • Liens on title: Most title lenders require that you own your vehicle outright. If you have any loans, they must be small enough that the title loan can repay them.
  • Inability to repay the loan: You must provide proof of stable income. Lenders must see that you have the ability to repay the loan.
  • Documentation issues: A lender may reject your request if you don’t have documentation in your name, such as the car’s title or proof of income.
  • State laws: Not all states allow title loans and those that do have strict laws regarding how much you can borrow and how you repay the loan.

How to Overcome an Auto Title Loan Denial

Auto title loan denial can be frustrating, but there are potential solutions to overcome the issues and try again. You can apply for a loan from another lender or try again with the same lender after addressing the issues.

Fix Income Issues

If the title loan lender turned you down because you didn’t have adequate proof of income, get better documentation to prove you can afford the loan. Fortunately, lenders accept more than pay stubs from an employer.

You can apply for the loan with documents, including pension income, worker’s compensation, disability pay, or inheritance funds. The key is to have documentation from the entity providing the funds. The documentation must be on their letterhead or have other proof that it’s from an official source.

Fix Title Issues

If you were turned down due to title issues, see what you can do about fixing them. For example, if you paid off the lien, but it still shows on the vehicle title, contact the lender to get proof of the lien payoff. You can then take this documentation to your local DMV so they can issue a new lien-free title.

If you own the car with another person and there is an ‘and’ between your names on the title, you need their signature to approve the loan.

Lower Requested Loan Amount

Sometimes, the loan amount is too high for lenders to approve. Either it’s higher than the limit they allow, or your car’s value doesn’t support the loan amount. Ask the lender if you can lower the requested amount and if it would increase your chances of approval.

Try Other Title Loan Lenders

Every title loan lender has unique qualifying requirements. It’s not only a good idea to shop around to find the best deal, but it may also be necessary if you face a rejection. Discussing the qualifying requirements with multiple lenders can help you identify if you meet their criteria and potentially increase your chances of approval.

Title Loan Requirements

Even though title lenders have different requirements and require different documents, there are some basic rules they all follow, including:

  • Adequate income: You must prove you can afford the loan with a steady source of income, even if it’s not employment.
  • Proper collateral: A title loan requires collateral for your car. You must own the car yourself or have the other person’s approval.
  • Lien-free title: You can’t get any loan on your car when you apply for a title loan. The title must also be free of any old liens.
  • Proof of residency: You must prove you live in the state you applied for the title loan. Not all states allow them, so you must apply in your state.
  • Proof of insurance: Some state laws require that you provide proof of adequate insurance according to the state’s laws to drive the car.
  • No current bankruptcies: You cannot be involved in a non-discharged bankruptcy. The only exception is if you have trustee approval on a Chapter 13.

Alternatives to Auto Title Loans if You Don’t Qualify

What if you fix all of the issues that disqualify you for a title loan and still don’t qualify? Here are some alternatives to this short-term loan:

  • Borrow from friends or family: If you only need a small amount to get through a financial crisis, ask friends or family if you can borrow the money.
  • Credit card: If you have enough room in your line of credit, you can charge the expense for the financial crisis and pay it off as you can.
  • Negotiate with your creditors: Creditors may assist with a financial crisis, such as a lower interest rate if you ask.

Final Thoughts

Facing a financial emergency without help is scary. Knowing what disqualifies an applicant for a title loan can help you understand what you must do to qualify. A poor credit history won’t stop you from getting approved, but insufficient income, liens on the title, or lack of proper ID can make a loan provider turn you down.

If you’re looking for funds in a financial emergency, contact us today to learn more about how we can help. Our professionals are here to help you online or by phone at 888-700-8900.Don’t give up if other lenders have denied you. We offer a free application with no obligation to accept the loan. See if you qualify; our online application process takes only a few minutes.

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.