How to Borrow Against a Car Title in Minnesota

Using a car title, people with poor credit may still qualify for a loan.

If cash is tight, your credit is no so good, and bills are due, a loan secured by a car title may be an option to ease your financial situation. In Minnesota, to get a loan secured by a car title the title must be in your name and you must own the car. Some stores specialize in making loans backed by a car as collateral. Car title loans are considered to be "subprime" loans because they typically target low-income individuals and those with bad credit, and offer a much higher interest rate than traditional loans.

Things You'll Need

• Title to a car that you own
• Proof of income (pay stubs)
• Valid driver license

Instructions

1. Visit your local title loan or "cash" store and fill out a title loan application. These applications are available in the store and sometimes they are also available online.

2. Present a copy of your current driver license as proof of your identity. The store will make a copy of it and enter the information into their loan system.

3. Present copies of your last two pay stubs (if paid every two weeks) or four pay stubs (if paid weekly) to prove that you have a steady source of income to repay the title loan. You may also be required to present proof of car insurance, a utility bill in your name and a spare car key.

4. Turn in the completed title loan application to the title loan representative at the store, along with your car's title. In order to be eligible for a title loan, your car title must be free and clear, meaning it can't have any holds on it, such as a lien from a finance company or any other person or business.

5. Sign all loan documents and you should be able to collect your cash or check.

6. Make your payments on time and be sure to repay the entire loan before the due date, or the title loan company will gain the right to possess and sell your car.

7. Copy and file all documentation that you are given for your title loan, and keep all receipts of payment. This is your proof that all payments have been made on time. You will get your car title back. again free and clear, once the entire loan has been repaid.

Tips & Warnings

• The loan amount that may be available for your car title loan depends on the wholesale value of your car. Most car title loan companies in Minnesota loan 30 percent to 50 percent of the wholesale or "Kelley blue book" value of your car.

• If possible, bring the car to the title loan company with you, to assure them of its quality. Make sure it is clean, inside and out, to get the highest possible quality rating assigned to it by the car title loan representative. A higher wholesale valuation converts to a higher possible loan.

• If you do not repay your title loan on time, the company will take possession of, and likely sell, your car. Should they sell it for much more than you owe, you will not get any money back.

• Title loans secured by your car charge a high interest rate on the amount of the loan that you actually get, so you should exhaust all other possibilities before resorting to a title loan.

References

• Cash Store: St. Paul Minnesota Title Loans
• Auto Cash Title Loans: Loan Requirements
• Financial Dictionary: Subprime Loan Definition
• Americans for Fairness in Lending: Car Title Loans