Title Loans in Australia: A Comprehensive Guide
Looking for a way to access funds using your vehicle as security? In Australia, some lenders offer loans secured against a vehicle's title, commonly referred to as car title loans. This guide explores how these loans work, their potential benefits and risks, and alternative options to consider before making a decision.
Later, we'll also introduce Credit24's unsecured loan options that offer quick, transparent solutions for your financial needs.
What is a title loan?
A title loan is a type of secured loan where a borrower uses their vehicle's title as collateral while continuing to drive it. The loan amount is typically based on the vehicle’s value, with lenders often offering up to 25-50% of its assessed wholesale value.
For example, if a car has a wholesale value of $15,000, a borrower might be eligible for a loan of up to $7,500, subject to lender criteria. These loans may be an option for those seeking funds; however, they often come with high costs and risks, including potential vehicle repossession if repayments are not met. Borrowers should carefully assess affordability and consider alternative financing options before proceeding.
How do title loans work in Australia?
In Australia, vehicle-secured loans are offered by some lenders, allowing borrowers to use their car's title as collateral. The process generally involves the following steps:
Ownership verification: You must own your vehicle outright with no existing finance owing
Vehicle assessment: The lender evaluates your car's market value to determine the loan amount.The lender evaluates your car's value
Loan approval: If approved, you receive funds while the lender holds your car's title as security
Repayment period: You make regular payments while continuing to use your vehicle
Title return: Once the loan is fully repaid, you regain complete ownership of your title.
How title loan amounts are determined
The amount you can borrow through a title loan depends on several key factors that lenders carefully evaluate during your application.
Vehicle value assessment
The loan amount for a vehicle-secured loan is typically based on the vehicle’s assessed wholesale value. Lenders may offer a percentage of this value, commonly ranging from 25% to 50%, though actual amounts vary based on lender criteria and risk assessment.
To determine the loan amount, lenders consider:
Make, Model & Age: Newer vehicles often qualify for higher loan amounts.
Condition & Mileage: Well-maintained cars with lower mileage may receive better valuations.
Service History & Documentation: Proper records can support a more favorable assessment.
While vehicle value is a key factor, lenders may also evaluate borrower affordability and financial circumstances. It’s important to review loan terms carefully, as interest rates, fees, and repayment conditions vary by provider
Your financial capacity
While your vehicle's value plays a key role in loan approval, lenders may also assess your financial situation to determine affordability. If the loan falls under regulated consumer credit laws, lenders must verify your ability to repay without causing undue financial hardship.
This process typically includes:
Income & Expenses Review: Lenders evaluate regular income and financial commitments to assess disposable income.
Existing Debts & Liabilities: Any outstanding loans or financial obligations may impact loan approval.
Employment Stability: Consistent employment history may be considered when assessing financial stability.
Not all vehicle-secured loans are subject to responsible lending laws, so borrowers should carefully review loan terms, interest rates, and repayment conditions before proceeding.
Can I get a title loan in Australia?
Yes, title loans are available in Australia, but eligibility depends on several key factors. Your vehicle must be fully paid off and in your name, and you'll need to meet basic lending criteria, such as:
Being at least 18 years old
Having Australian citizenship or permanent residency
Receiving a regular income for the past 90 days
Having a valid bank account
Providing proof of identity and residency
Remember that different lenders may have additional requirements or varying criteria. Some might also consider applicants with less-than-perfect credit histories, as the loan is secured against your vehicle.
Benefits of car title loans
Quick access to funds
Title loans offer a fast solution when you need money urgently. Since the loan is secured by your vehicle, the approval process is typically quicker than traditional loans, with many lenders providing same-day decisions and funding.
Credit history flexibility
Unlike traditional bank loans, title loans place more emphasis on your vehicle's value than your credit score. This makes them an option for borrowers who might have been declined for unsecured loans due to credit history concerns.
Continue using your vehicle
One significant advantage is that you can continue driving your car throughout the loan term. The lender only holds the title as security, not the vehicle itself, allowing you to maintain your daily routine without disruption.
Understanding the risks and costs of title loans
Interest rates and fees
Title loans typically carry higher interest rates compared to traditional personal loans. This reflects the increased risk lenders take on and the convenience of quick approval. Before committing, it's crucial to understand:
Establishment fees
Monthly service charges
Interest rates and comparison rates
Late payment penalties
Early repayment options
Risk of repossession
When you take out a title loan, there's a significant risk of losing your vehicle if you default on payments. The National Credit Code (Schedule 1 of the National Consumer Credit Protection Act 2009) sets strict requirements that lenders must follow before taking enforcement action. According to Section 88 of the Code, lenders must:
Provide you with a default notice before any enforcement action
Allow at least 30 days from the notice date for you to remedy the default
Include specific information about the default and how to remedy it
Furthermore, Section 91 of the Code states that if you remedy the default within the specified period and no further defaults occur, the contract is considered to have never been in default.
Legal protections for title loan borrowers
Australian law provides strong protections for borrowers through the National Credit Code. Here's some important things you should know about your rights:
Default and enforcement
Under Section 88 of the Code, before any enforcement action:
You must receive a default notice from your lender
You get at least 30 days to fix the default
If you remedy the default in time, Section 91 states your loan is considered never to have been in default
Financial hardship provisions
Section 72 of the Code gives you the right to request changes to your contract if you're experiencing financial hardship. This means if you're struggling with repayments, you can:
Apply to your lender for a hardship variation
Propose changes to help manage your repayments
Have your request properly considered
Repossession process
If repossession becomes necessary, the law ensures:
You receive a written notice within 14 days of repossession
The notice must include your vehicle's estimated value
The lender can't sell your vehicle for 14 days after this notice
If you lodge a complaint with the Australian Financial Complaints Authority (AFCA), the sale must wait until the complaint is resolved
How to apply for a title loan
Step 1: Initial assessment
The process begins with gathering essential documentation to prove your eligibility. You'll need to provide vehicle registration papers and proof of ownership, along with income verification through recent payslips or bank statements. Furthermore, you'll need valid ID and proof of residence to complete your application.
Step 2: Vehicle evaluation
During this stage, lenders conduct a thorough assessment of your vehicle. This includes a physical inspection to verify its condition, followed by market value comparison to determine its worth. They'll also review the service history to ensure proper maintenance over time.
Step 3: Loan approval and funding
Once your application meets all requirements, the approval process moves quickly. You'll review and sign the loan documents, ensuring you understand all terms and conditions. After approval, most lenders transfer funds within 24 hours, and your repayment schedule begins shortly after.
Alternative financing options
Credit24 unsecured personal loans
Instead of risking your vehicle with a title loan, consider Credit24's unsecured personal loans. We offer a straightforward alternative with quick online approval and competitive rates. Our loans don't require any collateral, meaning you can access the funds you need while keeping your assets safe. Plus, with flexible repayment terms up to 36 months and loan amounts from $500 to $10,000, you can choose an option that perfectly fits your financial situation.
What makes Credit24's unsecured loans particularly attractive is our transparent fee structure and simple application process. You'll know exactly what you're paying from the start, and if approved, you could receive funds within 60 seconds*. Whether you need money for emergencies, debt consolidation, or business opportunities, our unsecured loans offer a safer alternative to title loans.
Secured personal loans
Consider exploring other secured loan options that might better suit your needs. You could use term deposits or other valuable assets as security, potentially securing better rates while keeping your vehicle free from obligations.
Government assistance
Many Australians can access various government support programs. From Centrelink advances to no-interest loan schemes (NILS), these options often provide more affordable solutions for those facing financial challenges.
Title loans FAQ
Can you take a title loan against a financed car?
While it's technically possible to get a title loan on a financed car, the process is more complex than with a fully-owned vehicle. The amount you can borrow depends heavily on your car's equity - that is, the difference between your car's current value and what you still owe on it.
Since your car already serves as collateral for your existing car loan, lenders will be particularly careful when assessing your application. They'll need to verify not only your car's value but also your current loan balance and payment history. This helps them determine if there's sufficient equity to secure an additional loan.
What happens if you fail to repay your title loan?
Defaulting on a title loan in Australia triggers a specific legal process designed to protect both lender and borrower rights. If you miss payments or default on your loan, here's what typically happens:
First, you'll receive a formal written notice regarding potential repossession.
This notice will include:
A current valuation of your vehicle
Detailed repossession costs
Any additional fees or charges that may apply
A clear statement of your legal rights and obligations
From the date you receive this notice, you'll have a 21-30 day grace period to resolve the situation. During this time, you can either:
Pay the overdue amount to maintain your loan
Work with your lender to arrange a hardship variation
Seek financial counseling for alternative solutions
If you can't reach a resolution within this period and no alternative arrangement is made, the lender may proceed with repossession and sale of the vehicle.
How long does it take to get approved for a title loan?
The approval process for title loans is typically quite fast compared to traditional loans. Most lenders can assess your application within hours, not days. At Credit24, we aim to provide quick decisions, and if approved, funds can be transferred to your account within 60 seconds*. However, the exact timing may depend on your documentation and vehicle assessment requirements.
Can I get a title loan with bad credit?
Unlike traditional loans, title loans focus more on your vehicle's value than your credit score. While lenders will still perform credit checks as part of responsible lending practices, a less-than-perfect credit history may not automatically disqualify you. However, it's important to remember that even though approval might be easier, you should still carefully consider whether you can comfortably manage the repayments before proceeding.
Why choose Credit24 instead of risking your car?
While title loans might seem appealing for quick cash, they put one of your most valuable assets at risk. Credit24 offers a smarter alternative with our unsecured personal loans. You can borrow up to $10,000 without using your car as collateral, enjoying competitive rates and flexible repayment terms.
Our simple online application takes minutes, and if approved, you'll receive funds within 60 seconds*. Keep your vehicle safe while accessing the funds you need - that's the Credit24 difference.
