Title loans

What is a title loan

If you have a low credit score, it may be difficult for you to borrow money. A title loan is an option for borrowing money if you have a low credit score and own a car.

You use your car as a guarantee that you’ll pay the money back. You may also use other types of vehicles that you register in your province or territory. You keep and may continue to use your car when you get a title loan. If you don’t make your payments, you could lose your car.

Title loans are typically short-term, ranging between 3 months and 3 years. They usually have high interest rates and fees. This makes it an expensive way to borrow money.

Title loans are also known as:

Banks and credit unions don’t offer title loans. They’re available from alternative lenders in stores and online.

Title loan rules and regulations

The federal government doesn’t oversee title loans.

Provinces and territories have different rules and regulations for title loan lenders. For example, some title loan lenders may need to have a license or be registered to operate.

You may find information on rules and regulations with your provincial or territorial Consumer Affairs office.

Find your provincial or territorial Consumer Affairs office.

Things to expect when you get a title loan

Title loans vary between lenders. Some lenders won’t give you a title loan if you owe money on your car.

Some lenders use the value of your car to determine:

Read the details of your contract carefully before you sign. Ask your lender for a copy of the agreement. Ask questions about anything you don’t understand.

Find out what to consider before borrowing money.

What you’re entitled to know before taking out a title loan

When you get a title loan, you have the right to receive specific information in your contract documents.

This information may include total cost, interest rate, additional fees and more.

Information may differ depending on your province or territory.

Check with your province or territory to learn more about the information you should receive,


A lien is a lender’s claim for repayment that is registered against a car.

Most lenders will check to make sure there isn’t already a lien on your car. If there is already a lien, the lender may still offer you a title loan. That would be the case if your car can be sold for more than the amount of the existing lien.

The lien will stay registered on the car until the title loan is paid off.

Learn more about risks associated with car liens.

GPS and car immobilizer devices

Lenders may install a Global Positioning System (GPS) device and a car immobilizer when you get a title loan. They could also keep a copy of your keys.

A GPS device allows a lender to track the location of your car. A car immobilizer allows the lender to shut off your car’s starter remotely. It’s also known as a vehicle or ignition immobilizer or starter interrupter.

Depending on the province or territory you live in, these devices may not be allowed.

Make sure you understand how the lender will use these devices before taking a title loan.

Interest rates

Interest rates on title loans can be as high as 60% per year. This depends on the terms of your contract.

By law, lenders cannot charge more than 60% interest annually. That includes fees and interest you’ll pay to get the loan.


Fees vary between title loan lenders. Before you sign a contract, make sure you understand the fees.

Types of fees may include:

Find out how much a title loan may cost with this infographic.

Insurance and title loans

Your title loan lender will ask for proof of insurance on your car when you apply for a title loan. You have the right to get insurance from any insurance provider you choose.

Lenders do this to make sure they get their money back if something happens to your car.  For example, if your car is in an accident or stolen.

In some provinces and territories, you must let your insurance company know any time there’s a new lien on your car. If you don’t and your car is in an accident or stolen, your insurance company may deny your claim. This means that you would be responsible for paying the remaining cost of your title loan yourself. It also means that you may no longer have your car.

Check with your insurance company before you get a title loan.

Paying back a title loan on time

If you miss a payment or can’t pay back your title loan by the due date:

Options to consider before getting a title loan

Before getting a title loan, consider whether you really need the money and how you’ll use it.

If you’re having trouble making your payments, you may end up going into more debt. Consider other options such as asking for a payment holiday or a lower interest rate credit card.

Find other options to get through financial difficulties.

Getting out of a title loan

If you get a title loan, the faster you pay it off, the less interest you’ll pay. You can increase your payments or pay off your loan completely, at any time, without penalty.

Make sure the lender removes the lien after you’ve paid off the loan.

Use the Financial Goal Calculator to make a plan to pay off your debt faster.

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