Auto equity loan
Also known as: Car title loan · Vehicle title loan · Loan against car title · Borrowing against your car
A loan secured by a vehicle the borrower already owns, with the lender recorded as lienholder on the title — from bank auto equity loans to high-cost title loans regulated state by state.
At Zarv
R$750 million in financed vehicles tracked in real time by Zarv.
The same collateral backs two very different products. Banks and credit unions offer auto equity loans against a paid-off or low-balance car at rates below unsecured credit. Title lenders make small, short loans at very high cost: the CFPB found in 2016 that single-payment title loans were available in 20 states, five more allowed only installment title loans, and one in five borrowers had their vehicle seized.
Rules are mostly state law — some states authorize title lending with caps, others effectively bar it — plus federal overlays. The Military Lending Act caps credit to active-duty servicemembers and their dependents at a 36% MAPR, and its exemption for vehicle credit covers only loans that finance the purchase of the vehicle, not loans against a car already owned.
Either way, the collateral is worth what the car is worth, and the car keeps moving. Between funding and a possible default it may be driven far more than declared, leave the state, be sold or parted out. Zarv tracks R$750 million in financed vehicles in real time in Brazil, detecting misuse and the patterns that precede default while there is still something to recover.
Frequently asked questions
What is the difference between an auto equity loan and a title loan?
Both are secured by a car you own. An auto equity loan from a bank or credit union is usually an installment loan priced on your credit. A title loan is typically a small, short-term, high-cost loan where the lender holds the title, and it is regulated, capped or prohibited depending on the state.