Car Title Loans vs. Auto Title Equity

Individuals who are on tough financial situations and need to obtain USD 1,000 or more should think of using their vehicle as collateral for short term loan for title options. Two of the most prevalent ones are car title loans and auto equity loans. While many use the terms synonymously, it should be remembered that they are very different from each other.

There are a couple of variables that make them distinct, perhaps the most considerable one is the aspect of car ownership. Below is a more extensive look at the details of each loan.

Car Title Loans

To qualify for car title loans, borrowers need to own their vehicle outright. If they are still making monthly instalment payments, then their application will be declined.

Other aspects regarding car title loans are as follows:

  • Individuals who have negative credit rating can still qualify for car title loans.
  • The vehicle that will be used as collateral should be in pristine condition, not more than 10 years old, and has a minimum market value of USD 2,000.
  • The amount that will be released will be decided by the projected ability of borrowers to send over payments on a timely basis and the vehicle’s overall market value.
  • Borrowers can still use their vehicle as long as they send their payment on agreed dates.

Auto Equity Loans

Auto equity loans are for individuals who want to acquire loans but are still in the process of paying of their vehicle. It should be noted that the legal owner of the vehicle is the credit union or the bank that financed the purchase. Regardless of this stipulation, individuals who are still paying their monthly instalment can apply for auto equity loans.

In general, the minimum amount of equity varies from one lender to another, but borrowers are usually allowed to get a loan amount of 50 percent of their equity. This means to obtain a USD 1,000 loan, borrowers need to have USD 2,000 worth of equity.


As explained in this article, in terms of conditions and qualifications, car title loans and auto equity loans are basically the same. The aspects that borrowers need to be aware of are vehicle ownership and approval rates.

Those who are still not sure what kind of loan will they obtain are advised to ask the personnel of lending companies to know the general guidelines so that they can decide if they will move forward or not.

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