Title Loans: How They Work, What They Cost, and the Risks

A title loan is a loan secured by your vehicle. The lender holds the title, and if you cannot repay, the lender may be able to repossess the car. What a title loan costs, and what protections you have, depends heavily on your state: some states cap rates, some set no cap, and a few have repealed their title loan laws.

What a title loan is

In a title loan, you give the lender a security interest in a vehicle you own outright, and the lender lends against it. Texas law, for example, defines an auto title loan as a loan in which an unencumbered motor vehicle is given as security, and says it does not include a loan to finance buying the vehicle (Tex. Fin. Code § 393.221(3)).

You usually keep driving the car while you repay, but the lender holds the title.

How a title loan usually works

• You show the lender the vehicle, its title and identification. The lender decides how much to lend, often based on the vehicle's value. Some states limit the loan to the vehicle's value: Nevada and Utah say it cannot exceed fair market value, and Wisconsin says the principal cannot exceed 50% of retail value.
• You agree to a repayment schedule. Many title loans are due in a single payment after a short term. Others are repaid in installments over several months.
• If you cannot pay when the loan comes due, the lender may offer to extend or refinance it. That usually adds more fees or interest.
• If you default, the lender may be able to repossess the vehicle, as the Illinois Department of Financial and Professional Regulation notes in its consumer credit FAQ.

What title loans cost

Costs are often quoted as a fee per $100 borrowed, a monthly rate, or an annual percentage rate (APR). Our guide to how APR works in payday and cash advance loans explains why the same fee can look very different depending on how long the loan lasts.

Texas publishes some of the most detailed data. The Texas Office of Consumer Credit Commissioner (OCCC) reports on credit access businesses, which arrange title loans in that state. Its report for the second quarter of 2026 gives these averages:

Texas title loan type (OCCC, Q2 2026)	Average fee per $100	Average loan	Average term
Single-payment	$18.90	$1,952	30 days
Installment	$112.01	$1,426	163 days

To turn that into dollars: $18.90 per $100 on a $1,952 loan is about $369 in fees for a 30-day single-payment loan. For the installment type, $112.01 per $100 on a $1,426 loan is about $1,597 in fees over about 163 days. These are our conversions of OCCC averages, not figures from a particular lender, and your own disclosure may differ. The OCCC figures cover the credit access business fee, so read your paperwork for any other charges.

Texas sets no dollar or percentage limit on those fees. The statute says a credit access business may charge fees as agreed with the consumer, if disclosed (Tex. Fin. Code § 393.602(b)).

Refinancing appears to be common. For 2025, the OCCC reports 74,839 consumers of single-payment title loans and 228,399 refinances originated in the year, which is about three refinances for every consumer. For installment title loans it reports 84,693 consumers and 37,429 refinances.

The main risk: losing your vehicle

Because the car is the collateral, the central risk is repossession. The OCCC reports that in the second quarter of 2026, 5,998 vehicles were repossessed under single-payment title loans and 4,874 under installment title loans in Texas. That is 10,872 vehicles in one quarter in one state.

Some rules soften the risk, and they vary:

• Warnings. In Texas, a credit access business arranging a title loan must warn you that on default you may be required to surrender the vehicle (Tex. Fin. Code § 393.223(b)).
• Deficiency. A deficiency is the amount you may still owe if the vehicle sells for less than the debt. In Delaware, the sale proceeds satisfy all outstanding indebtedness and the borrower is not liable for any deficiency (5 Del. C. § 2260). In Virginia, after a default the lender can repossess and sell the vehicle but, unless the borrower damages or hides it, cannot sue for a deficiency (Va. Code Ann. § 6.2-2217).
• Notice and workout. Virginia requires 10 days written notice before repossession and 15 days before sale. Delaware requires the lender to offer a workout agreement requiring at least a 10% net reduction of indebtedness every month before taking the vehicle (5 Del. C. § 2255(a)). Nevada requires a repayment plan offer that stays open at least 30 days after default before the lender sues on a defaulted title loan (Nev. Rev. Stat. 604A.5083(1)).
• Cancelling. Delaware lets you rescind a title loan for any reason until the end of the business day after the funds were disbursed, with no fee or interest (5 Del. C. § 2253(a)). Nevada has a similar right to cancel by the close of business on the next business day, with no cancellation fee (Nev. Rev. Stat. 604A.5079).

Ask whether your state has any of these protections. They differ from state to state.

What state law changes

There is no single national title loan rule that sets the cost for everyone. A few examples, in plain words:

• Virginia. A title loan can be at most $2,500, must last 6 to 24 months, and can carry simple interest of up to 36% a year. A monthly maintenance fee of the lesser of 8% of the original loan or $15 is allowed. On a loan of $1,500 or less, total fees and charges cannot exceed 50% of the original amount (60% above $1,500). See our Virginia lender directory.
• Florida. Rates are tiered: at most 30% a year on the first $2,000 of principal, 24% on the part from $2,000 to $3,000, and 18% above $3,000. A loan can be extended in 30-day periods by mutual consent at no higher rate, and unpaid interest cannot be added to principal (Fla. Stat. § 537.011). See Florida title loans.
• Tennessee. Interest is capped at 2% a month, plus a customary fee of up to one-fifth (20%) of the original principal, or of the unpaid balance at each renewal. The maximum loan is $2,500 and the term is 30 days, renewable in further 30-day periods. See Tennessee title loans.
• Texas. Fees are set by agreement and disclosure rather than a statutory cap, as described above. See Texas title loans.
• Delaware and Idaho. Neither sets a statutory rate cap on title loans. Delaware limits the stated repayment period to 180 days or less; Idaho limits an agreement to 30 days, with renewals allowed.
• Kentucky and Montana. Kentucky repealed its Title Pledge Lending law in 2024, and Montana repealed its Title Loan Act. Both states therefore no longer license title lenders.

This is only a sample. To see which lenders are listed for your state, start at the lender directory.

Questions to ask before you borrow

• What is the total dollar cost if I pay on time? What if I extend or refinance once, or twice?
• What is the APR, and how is it calculated? Is the fee charged again at each renewal?
• Is the lender licensed in my state? Does the state require it to?
• What exactly happens if I miss a payment? Can the lender repossess, and what notice must it give?
• If the vehicle is sold for less than I owe, do I still owe the difference?
• Can I cancel the loan the next business day, and is there any fee?

Options to consider first

These are general suggestions, not recommendations of a particular provider:

• Ask a credit union about a small-dollar loan. Membership rules and terms vary.
• Call the company you owe, such as a landlord, utility or medical provider, and ask about a payment plan or a later due date.
• Look into local assistance, such as community organizations or your local 211 service.
• If you already have a title loan you cannot repay, ask the lender what options your state requires it to offer before you miss a payment.

Frequently asked questions

Do I keep my car with a title loan?

Usually you keep driving it while the loan is current, but the lender holds the title or a lien on it. If you default, the lender may be able to repossess it.

Can a lender sue me after taking my car?

It depends on the state. In Delaware, the borrower is not liable for a deficiency. In Virginia, the lender generally cannot sue for one unless the vehicle was damaged or hidden. Other states differ, so read your contract and your state's rules.

Are title loans available in every state?

Not in the same form. Kentucky and Montana repealed their title loan laws, so neither state licenses title lenders any more, and Louisiana does not allow title-only pawn transactions. A repeal is not the same as an outright ban, and the rules differ widely from state to state, so check your state's current rules before you borrow.

Can I cancel a title loan after signing?

Only where the law gives you that right. Delaware and Nevada give a short window that ends at the close of the next business day. Other states may not, so ask before you sign.

Sources

• Credit access business quarterly report, Q2 2026, Texas Office of Consumer Credit Commissioner, September 2026 (fee, loan size and term averages; repossessions).
• Credit access business annual report, 2025, Texas Office of Consumer Credit Commissioner, March 2026 (consumers and refinances).
• Texas Finance Code ch. 393 (§§ 393.221, 393.223, 393.602), Texas Legislature, checked October 9, 2026.
• Consumer credit FAQ, Illinois Department of Financial and Professional Regulation, checked October 9, 2026.
• 5 Del. C. §§ 2253, 2255, 2260, Delaware Code Online, checked October 9, 2026.
• Va. Code § 6.2-2217 and § 6.2-2216, Virginia Law, checked October 9, 2026.
• Nev. Rev. Stat. 604A.5083, 604A.5079 and 604A.5076, FindLaw statute text, checked October 9, 2026.
• Utah Code § 7-24-202 and Wis. Stat. § 138.14, FindLaw statute text, checked October 9, 2026.
• Fla. Stat. § 537.011, Florida Legislature, checked October 8, 2026.
• Tenn. Code Ann. § 45-15-111 and § 45-15-113, FindLaw statute text, checked October 8, 2026.
• Idaho Code § 28-46-506, FindLaw statute text, and 5 Del. C. § 2250(4), Delaware Code Online, checked October 9, 2026.
• 2024 Ky. Acts ch. 152 (HB 726), Kentucky General Assembly, and Mont. Code Ann. § 31-1-801 et seq. (repealed), Montana Legislature, checked October 9, 2026.
• La. R.S. 37:1801, FindLaw statute text, checked October 8, 2026.

We are not a lender. Rules change; check your state's current rules and the lender's own disclosures before you borrow.