How to Use Car as Collateral for Personal Loan

Did you know you can use your car as collateral to get a loan? If you need a personal loan, there are many companies offering loans secured on your car or title loan. Offering your car as collateral is a good bet, especially if you have poor credit scores. Using your car as collateral to get a personal loan is known as a secured loan, and it means that the lender can repossess your car if you default on the loan.

Why Use Your Car as Collateral for a Personal Loan?

There are a few reasons why you might want to use your car as collateral for a personal loan:

  • To qualify for a loan: If you have bad credit score or a limited credit history, it may be difficult to qualify for a personal loan without collateral. Using your car as collateral can increase your chances of getting approved for a loan.
  • To get a lower interest rate: Lenders typically offer lower interest rates on secured loans, such as personal loans with collateral. This is because the lender has the option of repossessing your car if you default on your payments.
  • To borrow a larger amount of money: If you need to borrow a large amount of money for a major expense, such as a home repair or medical bill, using your car as collateral can help you qualify for a larger loan amount.

Using Your Car as Collateral for a Loan

To use your car as collateral for a personal loan, you will need to have equity in your car. Equity is the difference between the value of your car and the amount you still owe on your car loan. For example, if your car is worth $20,000, and you owe $10,000 on your car loan, you have $10,000 of equity in your car. To determine the value of your car, you can get an appraisal from a local dealership or use an online valuation tool.

Once you have determined the value of your car, you will need to find a lender that offers personal loans with collateral. You can compare loan terms from multiple lenders to find the best deal.

When applying for a personal loan with your car as collateral, you need to provide the lender with essential information and documents regarding yourself and the car. This includes details about your car (make, model, VIN, ownership proof), personal identification, income proof, employment and financial information, credit history, loan amount and terms, insurance details, and possibly a vehicle inspection. If you are approved for the loan, the lender will place a lien on your car title. This means that the lender has the legal right to repossess your car if you default on your loan payments.

Where to Get a Loan Using Car as Collateral

The following are some of the companies that can help you get a loan by using your car as collateral.


TitleMax is a title loan company that offers loans to borrowers who use their car title as collateral. It has over 900 locations in 17 states. To be eligible for a TitleMax loan, you must have a clear car title and be at least 18 years old. TitleMax does not require a credit check, but they will do a soft credit pull to verify your identity.


  • Car title loans up to $10,000
  • Interest rates range from 25% to 300%



LoanMart is a car title loan company that you can use to get a loan using your car title as collateral. It is a great option for borrowers who need money quickly, as you can often receive your funds within one day of approval. LoanMart offers car title loans in Alabama, Arizona, Georgia, Missouri, New Mexico, Utah, and South Carolina.


  • LoanMart typically does not charge prepayment penalties, allowing you to pay off their loans early without incurring additional fees
  • It offers loans ranging from a few hundred dollars to tens of thousands of dollars
  • Interest rates on LoanMart’s car title loans vary based on several factors, including your creditworthiness, the value of your vehicle, and your location



Caribou offers loans secured in your car. They offer a fast and easy auto refinance. You can check for their rates without impacting your credit scores and with no hidden costs.


  • APR of between 2.32% and 36.00%
  • Prequalify in minutes without giving your SSN


LightStream is an auto finance lender with fixed interest rates. You can get funded as soon as the day you apply. You don’t need any appraisal; neither do they have restrictions on age nor mileage.


  • Loan of between 5,000 and 100,000
  • Same-day funding
  • Loan period of between 24 and 84 months
  • Average APR of 5.990%


Autopay can also help get a loan using your car as collateral. Whether it is auto finance, a new car loan, or a lease buyout, they can help you.


  • Rates of as low as 2.99%
  • BBB rating of A+
  • Loan period of between 48 and 60 months

Is It Worth It to Use Your Car as Collateral for a Personal Loan?

If you have good credit and can qualify for an unsecured loan with a competitive interest rate, then it is probably not worth putting your car at risk. However, if you have bad credit or need a large loan amount, then using your car as collateral may be a good option for you. Using your car as collateral for a personal loan can be a good way to get a lower interest rate, qualify for a loan with bad credit, or get a higher loan amount.

If you do decide to use your car as collateral for a personal loan, be sure to compare offers from multiple lenders to get the best interest rate and terms. You should also make sure that you can afford to repay the loan on time each month.

Ndesanjo is an experienced writer and researcher on finance issues. With an MA from the University of Toledo, USA, he is a valuable asset to the FiFi editorial team, and his work helps to make finance work for everyone. He has lived in 5 countries and speaks 3 languages. Read more about the editorial team at FiFi and our editorial guidelines.