What we verified in “Car title loans and pawn loans: what you can lose”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to the FTC, car title loans are short-term loans, typically 15 or 30 days, that use your car, truck, motorcycle or other vehicle as collateral, usually for 25% to 50% of its value; to get one you give the lender your vehicle title; you usually need to own the vehicle free and clear, though some lenders take the title if you have paid off most of your car loan; the lender wants to see the vehicle, a photo ID and proof of insurance, and many want a duplicate set of keys; and you do not get your title back until you repay what you borrowed plus the finance charge and any other fees.

   Sources 1 · What To Know About Payday and Car Title Loans (FTC, October 2024), 'Car Title Loans': 'Car title loans, often just called title loans, also are short-term loans.'; 'They typically last 15 or 30 days.'; 'The loans use your car, truck, motorcycle, or other vehicle as collateral.'; 'They're usually for amounts ranging from 25% to 50% of the vehicle's value.'; 'To get a car title loan, you must give the lender the title to your vehicle.'; 'Usually, you need to own the vehicle free and clear, but some lenders will take your title'; 'if you've paid off most of your vehicle loan'; 'The lender will want to see the vehicle, a photo ID, and proof of insurance.'; 'Many lenders also want a duplicate set of keys for the vehicle.'; 'you won't get your vehicle title back until you repay the amount you borrowed'; 'plus the lender's finance charge and any other fees' · Checked October 31, 2026

2. According to the FTC, title loans are expensive: they often have monthly finance fees as high as 25%, which translates to an APR of about 300%; lenders often add other charges, such as processing, document and origination fees, and you may have to buy add-ons, such as a roadside service plan; in its example, borrowing $1,000 for 30 days with a 25% fee costs $250, so you owe $1,250 plus other fees; and rolling it over another 30 days adds another $250, so you owe $1,500 plus rollover fees, and borrowing $1,000 for 60 days costs at least $500.

   Sources 1 · What To Know About Payday and Car Title Loans, 'Car Title Loans: How Much They Cost': 'Car title loans are expensive.'; 'Title loans often have monthly finance fees as high as 25%, which translates to an APR of about 300%.'; 'Title lenders often add other charges to the loan amount, like processing, document, and loan origination fees.'; 'You also may have to buy add-ons, like a roadside service plan.'; 'The finance fee is 25%. That means that you have to pay $250 to borrow $1,000.'; 'you must pay $1,250, plus any other fees the lender charges'; 'The rollover will add another $250 in finance fees'; 'so now you owe $1,500'; 'The rollover brings your cost of borrowing $1,000 for 60 days to at least $500.' · Checked October 31, 2026

3. According to the FTC, you could lose your vehicle: if you cannot repay, the lender may repossess it even if you have been making partial payments; some lenders insist on installing GPS and starter interrupt devices to locate the vehicle and disable its ignition remotely; once repossessed, they can sell it; and in some states lenders can keep all the money from the sale, even if they get more than you owe.

   Sources 1 · What To Know About Payday and Car Title Loans, 'Car Title Loans: Repossession': 'You could lose your vehicle.'; 'If you can't repay the money you owe, the lender may repossess your vehicle,'; 'even if you've been making partial payments.'; 'some lenders insist on installing Global Positioning System (GPS) and starter interrupt devices'; 'so that they can locate the vehicle and disable its ignition system remotely, making repossession easier.'; 'Once the lender repossesses your vehicle, they can sell it.'; 'In some states, lenders can keep all the money they get from selling the vehicle, even if they get more than you owe.' · Checked October 31, 2026

4. According to a CFPB study of nearly 3.5 million single-payment auto title loans, one in five borrowers has their car or truck seized by the lender for failing to repay; more than four in five of these loans are renewed the day they are due because borrowers cannot repay them in one payment; only in about 12 percent of cases do borrowers repay in a single payment without quickly reborrowing; in more than half of instances borrowers take out four or more consecutive loans; more than two-thirds of the business comes from borrowers who take out seven or more consecutive loans; the typical loan is about $700 with a typical APR of about 300 percent; and losing the vehicle can cost borrowers ready access to their job or the doctor's office.

   Sources 2 · CFPB Finds One-in-Five Auto Title Loan Borrowers Have Vehicle Seized for Failing to Repay Debt (May 18, 2016): 'one-in-five borrowers who take out a single-payment auto title loan have their car or truck seized by their lender'; 'more than four-in-five of these loans are renewed the day they are due'; 'In only about 12 percent of cases do borrowers manage to be one-and-done'; 'In more than half of instances, borrowers take out four or more consecutive loans'; 'More than two-thirds of auto title loan business comes from borrowers who wind up taking out seven or more consecutive loans'; 'The typical loan is about $700 and the typical annual percentage rate is about 300 percent'; 'costing them ready access to their job or the doctor’s office'; 'nearly 3.5 million anonymized, single-payment auto title loan records' · Checked October 31, 2026

5. According to the CFPB's tool for choosing financial products, with an auto title loan you borrow money for a short term and give up the title to your car or truck until you repay it; the loan is often 25 to 50 percent of the car's total value; it can be repaid in installments or all at once; and if you cannot pay, the lender can repossess your car and sell it; and with a pawn loan you are paid cash in exchange for an item the pawn shop keeps during the loan (such as jewelry or electronics), the loan is often much less than the item's actual value, and if the loan is not repaid as agreed, the shop can sell the item to cover the debt.

   Sources 3 · Your Money, Your Goals: Finding financial products and services (CFPB), rows 'Auto title loan' and 'Pawn loan': 'Borrow money for a short term and give up the title to your car or truck until you repay it'; 'Often loan amount is for 25 to 50 percent of the car’s total value'; 'Can be repaid in installments or all at once'; 'If you’re unable to pay, lender can repossess your car and sell it'; 'Paid cash in exchange for an item that the pawn shop keeps (like jewelry or electronics) during the loan'; 'Loan amount is often much less than actual value of item'; 'If loan isn’t paid back as agreed, shop can sell the item to cover the debt' · Checked October 31, 2026

6. According to a CFPB research brief, payday, auto title and pawn loans are often called alternative financial services because the typical lender is not a bank; they are typically for less than $1,000, with high interest rates and terms of a month or less; pawn loans typically use a valuable item, such as a computer or jewelry, as collateral; and in its survey, among people who had taken out a loan in the previous six months, 83 percent still owed money on an auto title loan and 73 percent on pawn loans, a sign that many roll them over or borrow again.

   Sources 4 · Consumer use of payday, auto title, and pawn loans (CFPB research brief, May 2021): 'often called alternative financial services (AFS) because the typical lender is not a bank'; 'typically less than $1,000—high interest rates, and short durations—typically a month or less'; 'pawn loans typically use some valuable item, like a computer or jewelry, as collateral'; 'consumers frequently roll over these loans or take out a new loan soon after re-paying the previous loan'; '83 percent still owed money on an auto title loan; and 73 percent still owed money on pawn loans' · Checked October 31, 2026

7. In a lawsuit against a pawnbroker, the CFPB explained that each fee on a pawn loan, whatever it is called, is a finance charge that must be included in calculating the annual percentage rate (APR): in its example, a $200 loan due in a month with a $10 finance charge, a $10 storage fee and a $20 processing fee totals $40 and yields an APR of 240 percent, although the pawnbroker disclosed only 120 percent; the CFPB noted that its complaint is not a finding that the law was violated; and in another action against pawnbrokers it said those fees are called, for instance, 'appraisal', 'interest', 'storage' or 'setup' charges.

   Sources 5 · CFPB Takes Action Against B&B Pawnbrokers For Deceiving Consumers About Loan Costs (November 3, 2016): 'when B&B Pawnbrokers made a $200 loan due in a month, it charged the consumer a $10 finance charge, a $10 storage fee, and a $20 processing fee'; 'Each fee is a finance charge that must be included in calculating the annual percentage rate'; 'The sum of these fees, $40, yields an annual percentage rate of 240 percent'; 'B&B Pawnbrokers disclosed an annual percentage rate of only 120 percent'; 'The CFPB’s complaint is not a finding or ruling that the defendants have actually violated the law'; and CFPB Takes Action Against Pawn Companies for Deceiving Consumers About Loan Costs (December 19, 2016): 'The charge is made up of several fees, called, for instance, “appraisal,” “interest,” “storage” or “setup” charges' · Checked October 31, 2026

8. According to the CFPB, if your car is repossessed: in many states a lender can repossess without warning or a court order after a missed payment, though other states require prior notice; under some state laws, it cannot do so by 'breaching the peace', such as by threats or physical force or by removing the car from a closed garage without permission; if you left belongings in the car, contact the lender right away to retrieve them and document what was there; in some states you have the right to pay what is overdue plus costs to get it back; you have the right to be notified before it is sold, and for a public sale, of the date, time and place; you may be able to buy it back by paying the full loan plus costs before the sale; if it sells for less than you owe, you may owe the difference, and if it sells for more, you may be entitled to the surplus; the lender must sell it in a commercially reasonable manner; and you may have other rights under state law, which you can learn about from your state attorney general, consumer protection office or local legal services office.

   Sources 6 · What happens if my car is repossessed? (reviewed October 29, 2026): 'In many states, a lender can repossess a vehicle – without a warning or a court order – after you’ve missed payment'; 'other states require lenders or servicers to send you a notice'; 'without “breaching the peace,”'; 'Threatening or using physical force'; 'Removing a vehicle from a closed garage without permission'; 'Contact your lender right away to arrange a time to retrieve your property'; 'In some states, laws grant you the right to pay to get your vehicle back'; 'You have the right to be notified before your vehicle is sold'; 'your lender must notify you of the date, time, and place of the sale'; 'you may be entitled to buy back the vehicle by paying the full loan amount, plus the repossession costs, before the sale'; 'This is known as a “deficiency balance.”'; 'if the car is sold for more than what you owe, you’re entitled to receive the surplus'; 'Lenders must sell the car in a commercially reasonable manner'; 'your state attorney general and state consumer protection office or by consulting with a private attorney or your local legal services office' · Checked October 31, 2026

9. According to the FTC, options that are less expensive and less risky than payday and car title loans include: asking your creditors for more time, and whether they will charge you for it; credit unions, which typically have lower rates, and some federal credit unions that offer 'payday alternative loans' (PALs), which are much less expensive than payday or title loans; some state-chartered credit unions with similar loans; local banks, which can offer smaller loans with easier repayment terms, and some large banks that offer small loans to customers with low or no credit scores; filing early if you expect a tax refund; a nonprofit credit counselor, free or low cost, or one through your employer, credit union or housing authority; help from family or friends; and charities and places of worship.

   Sources 1 · What To Know About Payday and Car Title Loans, 'Possible Alternatives': 'Ask your creditors for more time to repay them.'; 'find out if they'll charge you for that service'; 'some federal credit unions offer'; '“payday alternative loans,” or “PAL loans,” for small loans'; 'PAL loans are much less expensive than payday or car title loans.'; 'Some state-chartered credit unions offer loans similar to PAL loans.'; 'Local banks can offer smaller loans with easier repayment terms than many large regional and national banks.'; 'Some large U.S. banks now offer small loans or lines of credit to customers with low or no credit scores.'; 'If you think you might have a tax refund coming, file as soon as you can.'; 'Non-profit groups in every state offer credit guidance to people for no or low cost.'; 'Check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.'; 'Charities, churches, and other centers of worship often offer financial and other help at no cost' · Checked October 31, 2026

10. Under NCUA rules (12 CFR §701.21(c)(7)(iii) and (iv)), federal credit union payday alternative loans run from $200 to $1,000 for one to six months (PAL I) or up to $2,000 for one to 12 months (PAL II), are not rolled over, fully amortize and carry an application fee that never exceeds $20.

    Sources 7 · 12 CFR §701.21(c)(7)(iii)(A) and (iv)(A): 'not less than $200 or more than $1,000'; 'a minimum maturity of one month and a maximum maturity of six months'; 'The principal of the payday alternative loan is not more than $2,000'; 'a minimum maturity of one month and a maximum maturity of 12 months'; 'does not rollover any payday alternative loan'; 'fully amortizes the payday alternative loan'; 'in no case exceeds $20' · Checked October 31, 2026

11. According to the CFPB, the Military Lending Act (MLA) covers vehicle title loans for active-duty servicemembers and their dependents: they cannot be charged more than a 36% Military Annual Percentage Rate (MAPR), which includes finance charges, credit insurance and add-on products; they cannot be required to accept mandatory arbitration; and they can ask their legal assistance (JAG) office for help.

    Sources 8 · What is covered under the Military Lending Act? (reviewed July 27, 2023): 'Payday loans, deposit advance products, and vehicle title loans'; 'You can’t be charged more than a 36% Military Annual Percentage Rate (MAPR)'; 'Finance charges'; 'Credit insurance premiums or fees'; 'Add-on products sold in connection with the credit'; 'A creditor can’t require you to submit to mandatory arbitration'; 'you should contact your closest legal assistance (JAG) office' · Checked October 31, 2026

12. According to the Legal Services Corporation (LSC), it is an independent nonprofit established by Congress to fund civil legal aid for low-income Americans, it funds organizations in every state, the District of Columbia and the territories, and on its website you enter an address or city to find the nearest organization.

    Sources 9 · I Need Legal Help: 'LSC is an independent nonprofit established by Congress in 1974 to provide financial support for civil legal aid to low-income Americans'; 'in every state, the District of Columbia, and U.S. Territories'; 'enter an address or city below to find an LSC-funded legal aid organization near you' · Checked October 31, 2026