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What Is Car Title Pawning and When Should You Choose It?

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Need a quick cash infusion but don’t have enough credit to take a loan? You can use car title pawning to get easy cash for emergencies. Here’s the lowdown on how to pawn your car title.¬†

¬†¬†Cash emergencies can hit anyone, anytime. If you’ve already maxed out all the loans you can take from your bank or credit union, you can always look at other options! Anyone who’s seen Pawn Stars (and even those who haven’t) know that pawning an item is a quick way to get cash for financial emergencies.¬†¬†

Well, if you own a vehicle that’s been paid off, you can pawn the title and get enough money to tide you through tough situations. In this post, we break down all you need to know about car title pawning.¬†

How does car title pawning work?

Pawning your car’s title allows you to access quick, emergency funds by putting up your car as collateral. Instead of turning in your car, you can take the title to the pawn shop, which will appraise the vehicle’s value and then give you an equivalent amount of cash.¬†¬†¬†

You will be required to either pay back the lender in monthly installments with interest or as a lump sum amount after a specific period of time Рusually 15-30 days. If you are unable to do so, the lender will take possession of your car and sell it off to recover the pawned amount. 

One major advantage of pawning a car title is that it does not need a credit check and hence will not appear on your credit history.  

Car Title Pawning

 When should you pawn your car title?

Pawning your car’s title should ideally be kept as a last resort because of the high interest charged and the short repayment term. If you default on the amount, the pawn shop is within its rights to possess the car and sell it off to recover the amount.

Choose it only when you have exhausted all formal types of lending like personal loans, auto equity loans, title loans, refinancing, etc.

What is car title pawning

What do you need to pawn a car title?

Different states may have slight differences in the procedure to pawn a car title. However, some requirements include:

  • You should have paid off any auto loans you took to purchase the car
  • The lien-free auto title must list you as the owner
  • You must have a valid driver’s license
  • Proof of income (like employment, social security, and other sources of income)
  • Residence proof (like utility bills)

Also read: How to obtain your car title after paying off your loan

How to pawn a car title: Steps to follow

  1. Try to find out the estimated value of your car using a car valuation service like Kelley Blue Book or Edmunds. Pawning your car title only makes sense if the resale value covers the amount you want to loan.
  2. You will need to take your car and the title to the pawn shop, where they will appraise it.
  3. The final value established at the pawn shop takes into account not just the car’s value but also your ability to repay the loan amount.
  4. Once an acceptable figure is agreed upon by both you and the pawn shop, you will be asked to turn in your car’s title in exchange for funding – usually in the form of a check.

Pawning a title vs. Title Loan: What’s the difference?

Though the two terms ‘title loan’ and ‘title pawning’ are often used interchangeably, there is a slight difference.¬†

Auto title loans will require you to pass a credit inquiry before receiving funding. Your application will be recorded on your credit history and any default will also cause a credit hit. 

Title pawning is generally unregulated by formal financial institutions. They can offer loans to customers without any credit check, and base an applicant’s creditworthiness solely on the income proof and equity in the vehicle.¬†

What happens if you pawn your car title and then default?

If you default on the pawn amount, the pawn shop will first call you to verify one last time if you are repaying the amount. If not, they will ask a repo man to repossess the car. They can show up with a tow truck, hook up your car, and tow it away.

Pros and cons of pawning a car title

Benefits

  • You can access quick cash in a short appraisal period
  • No need for a credit check
  • You can ask for a loan based on the amount of equity in your car
  • You can continue driving your car as long as you

Drawbacks

  • Pawn shops can charge very high interest – often ranging from 20% to 200%
  • You will usually be able to borrow only up to 50% of the car’s value
  • Defaulting on the pawned title can result in repossession – often very quickly

How to access funds without pawning your car title

Car title pawning should be the last resort because in most cases they tend toward predatory lending. Instead, try these options before heading to a pawn shop:

  • Credit card cash advances
  • Peer-to-peer loans
  • Borrowing from friends or family
  • Refinancing your auto loan (if you have an active auto loan)

What is car title pawning

Can you pawn more than one title at a time? 

Yes, if you own more than one car, you can put each of them up as collateral with a pawn shop or lender to get funding. 

Frequently Asked Questions (FAQ) 

What happens when you use your car as collateral for a loan? 

When you use your car as collateral, it essentially means you take out a secured loan. Here, the lender can take ownership (repossession) of the car if you fail to pay the loan amount in time. 

What are two reasons not to pawn your car title? 

Borrowing from a pawn shop should be your last resort. Two reasons not to pawn a title include the high rate of interest charged and the short term of repayment. 


Here’s more info on top-rated airport parking, the best parking spots in your city, the most affordable auto insurance for your car, easy auto refinance, and top-rated car washes near you.


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