Title loans have long been seen as a way to borrow money when you have few financial options. You can typically use your vehicle's equity as collateral for a title loan without much of a credit check or lengthy underwriting process. There's a decent chance of borrowing up to $10,000 with just a paid off car and income verification.

But what if there's an issue with your insurance coverage or you don't have any insurance on your vehicle? Or what if you have liability insurance on your car or truck, but there's no coverage if it's ever damaged or destroyed? Do you really think a lender would offer a title loan to someone if there's no replacement value of coverage in the case of an accident or theft? Read on to find out if getting a title loan with no insurance is possible and how these loans work.

Do I Need Vehicle Insurance To Qualify For A Title Loan

In most cases, you will need comprehensive insurance coverage to get approved for a title loan. That's because your lender is using the vehicle as collateral for a loan, and they must ensure there's enough security available to them if you default on the payments.

Let's say you take out a title loan for $4,000. Your vehicle needs to be worth at least $8,000 to get approved, and the lender will verify that value through an in person inspection and by checking comparable sales. The last thing they want to do is offer you cash based on the vehicle's value when there's a risk that the car becomes worthless or decreases in value because of an accident or if it's stolen. If the vehicle has comprehensive insurance coverage, everything is okay, as the lender would be "made whole" and reimbursed if there's ever a catastrophic loss. But what about if you didn't have insurance or if you only have a limited amount of coverage? In that situation, there would no longer be collateral backing up the loan, and that's a significant risk to the lender.

The bottom line is that you typically need full replacement coverage on your vehicle if there's ever an issue where the car's value can be reduced. In addition to general liability coverage and personal injury coverage required in most states, you also need comprehensive coverage. In some circumstances, you may need an umbrella policy that covers more than the replacement value of your vehicle. Some lenders require this type of coverage as it gives them certainty that your car will be replaced or repaired no matter the situation.

What does Comprehensive Vehicle Insurance Cover

Comprehensive vehicle insurance coverage is not required to drive a vehicle in most states, and it may shock customers who need to purchase this option to move forward with a title loan. Insurance helps cover significant damage to your vehicle from fire, vandalism, and theft, and it can be a real lifesaver if you do not cause the damage.

Assuming you have coverage, your insurance company will offer to replace or repair the car up to its current cash value. For instance, if your car is valued at $20,000 and sustains $8,000 in damage, your insurance company will cover the cost of repairing your vehicle. There's often a deductible with this type of insurance, but it can be as low as $250, and that means you'll save a significant amount of money if your car is damaged or destroyed by a covered peril.

Comprehensive auto insurance coverage can be expensive, but if your lender requires it, you have little choice if you want to get a title loan. Most policies offer this coverage for less than $100 a month, and you can always cancel the policy after you repay your title loan.

Exceptions To Needed Insurance For A Car Title Loan

As with most loan options, there are always exceptions, and you may qualify for a title loan that doesn't require comprehensive insurance coverage. For instance, some states have specific requirements for what a lender can require and may limit the amount of insurance needed for a title loan. That doesn't mean you won't need insurance coverage, but a title loan approval may be possible if you have less than 100% coverage on your vehicle.

Other exceptions center around individual lender policies. While almost all title loan companies require some form of insurance on the vehicle, some lenders may look past this requirement. This option is possible if you're willing to put up other collateral to back up the loan or if you're only looking to borrow a few hundred dollars and it's not likely that your lender will repossess the vehicle.

The last exception here is if you can find a cosigner for your title loan. That doesn't necessarily mean they're adding themselves as a cosigner to the car's title, but instead, they're cosigning the loan itself. This is a risky proposition for someone and probably not something we'd recommend. But, adding a cosigner to your title loan application means they can add the vehicle to their insurance policy, and you won't need to apply for coverage on your own.

Apply For A Title Loan (With Or Without Insurance) With Car Title Loans 123

As mentioned above, you may need comprehensive insurance coverage to get approved for a title loan, but options are still available. Apply with us online or call 844-567-5011, and you may qualify for a loan under $5,000 even if you don't have full insurance coverage for your car, truck, or commercial truck. Either way, we'll work with you to find a local lender, and there may be a chance to get a same day title loan with little or no insurance on the vehicle!