California Auto Title Loans

Don't sign papers for California auto title loans until you understand the laws and regulations. An auto title loan is similar to a home equity loan. Once you've paid your car loan, you borrow against the equity in your car or truck. Doing a little research first will save you frustration down the road. Here are five things to know about auto title loans in California.

Studies Find About 11% of Loans End Up in Repossession

That's a pretty scary number. For every nine auto title loans in California, one of them ends up with the car or truck being repossessed by the lender. To prevent this, you must do everything you can to ensure the title loan is paid back on or before the due date. Paying back early is best!

California Doesn't Really Regulate Auto Title Loans

California auto title loans currently are not regulated. A measure to cap the interest rates failed in 2011. This means a company is not bound by strict laws limiting the fees and interest rates. While payday loans have limits, any consumer loan of more than $2,500 are not required to have a maximum interest rate. As many car title loans are in excess of $2,500, this enables lenders to charge you what they want in interest. Per Pew, the average APR on a California title loan is 300%. Shopping around will really help you get a low rate for title loans.

One Law Will Protect You

California laws require lenders to be upfront about the fees and interest you pay with any loan. Read over the terms of a California auto title loan before you sign the paperwork. If you don't understand something, don't sign! They must make everything clear and simple to understand. If you don't know the interest rate, don't sign. If they try to change it after you've signed, call the state at 1-866-275-2677.

Check That the Lender Has a California License

Lenders operating in California should be licensed. Ask to see it. If you have questions or want to verify a license, call the Department of Business Oversight or visit

Don't Sign if You Don't Agree

When you take out a title loan, the lender appraises the value of your car after you bring it to them. If you disagree with their appraisal or any of the terms, don't sign the paperwork. You don't want to take out a loan and put your car at risk. If your car does end up repossessed, you may have to add towing fees and storage fees to the loan amount in order to get it back. There are times a title loan is the only option, but make sure you've looked for alternatives before you take out a California auto title loan.