3 of the Best Loans Using Your Car as Collateral in 2025—Plus 5 Alternatives to Consider
When you need cash in an emergency, you’re ready to pull any lever to stay afloat. Sometimes, that means using your possessions—even your car—as collateral to get funding fast.
Many risks can be involved with these kinds of loans. As a Certified Financial Education Instructor®, I typically advise people against these. But sometimes, they may be your only option. Below, I’ll cover the best loans using your car as collateral, but I’ll also review some alternatives you may not have considered.
How to get a loan using your car as collateral
Two main loans use your car as collateral: auto equity loans and car title loans. Neither is particularly safe, but they’re a convenient way to get cash fast in emergencies.
Auto equity loans
Auto equity loans are a type of secured personal loan in which your car serves as collateral to back the loan. Like a home equity loan, you’re borrowing against the equity you have in your car (the amount you’ve paid off). Sometimes, lenders may let you borrow more than your equity, but you’re upside down on your car loan (you owe more on the car than it’s worth).
The major benefit of getting a secured personal loan instead of an unsecured loan? Because you’re offering collateral on the personal loan, your interest rate may be somewhat manageable, even if you have bad credit.
However, you risk repossession of your vehicle if you default on the loan. These loans can be challenging to find—not every car will qualify, and you’ll need to carry full-coverage auto insurance, which can be expensive.
Car title loans
A much more dangerous alternative is a car title loan (sometimes called a pink slip loan); I strongly advise against these loans. These loans are short-term (15 to 30 days) and only for borrowers who’ve paid off their cars in full. The loan amounts are small (usually 25% to 50% of the car’s value), but the interest rates can be ultra-high: upward of 300%.
If you can’t repay what you borrow in such a short time frame, lenders may roll what you owe into another loan (with more fees and interest). The lender could also repossess your vehicle. According to an older (2016) study by the Consumer Financial Protection Bureau (CFPB), 20% of borrowers who go this route ultimately have their vehicle seized.
Auto equity loans vs. car title loans
| Auto equity loan | Car title loan | |
| Ownership required | Some equity | Full ownership |
| Repayment term | 1 – 7 years | Up to 30 days |
| Interest rate | Up to 36% | Roughly 300% |
| Risk | Repossession | Repossession |
Pros and cons of loans using your car as collateral
While car title loans and personal loans using your car as collateral have a few advantages, there are major risks to consider.
Pros
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Easier approval
Using your vehicle as collateral makes it easier to qualify for a loan, even with bad credit.
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Faster funding
Auto equity loans and car title loans often offer relatively fast funding.
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Lower interest rates
Auto equity loans specifically may yield lower interest rates than an unsecured loan because there’s less risk to the lender.
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Flexible use
Much like you can use personal loans for almost anything, loans using your car as collateral are available for most purposes. Note: Because of their high-risk nature, you should only use these loans for emergencies.
Cons
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Risk of losing your car
This is the major risk associated with using your car as collateral. Repossession is common.
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Risk of going upside down on a car loan
If you borrow more than the equity you’ve built in your car, which constantly depreciates in value, you’ll owe more on your car (between your auto loan and the auto equity loan) than you could sell the car for.
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Potential for high rates and fees
Unlike auto equity loans, car title loans have notoriously high interest rates (around 300%!). They also carry high fees.
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Limited loan amounts
Both auto equity loans and car title loans yield small loan amounts, as they’re only a percentage of your vehicle’s value. Some other types of personal loans may go as high as $100,000 or more.
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Fast repayment terms
Car title loans usually require repayment within a month. This may lead to a cycle of borrowing more money (with additional fees) until the lender repossesses your car.
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Vehicle restrictions
Lenders may have eligibility requirements for vehicles, such as age and mileage limits.
Best loans using car as collateral
While there are often safer options to consider, sometimes an auto equity loan is the right path forward. I can’t ever recommend a car title loan, but I’ve compiled some of the best auto equity loans below.
Credible
Best for Comparison Shopping
Why we picked it
Credible doesn’t offer auto equity loans (or any loans, for that matter). Instead, it’s an online loan marketplace that lets you compare multiple loan options in one place. You can filter results, meaning you can specifically look at multiple loans using your car as collateral, side-by-side, to make the best choice for your situation.
- Soft credit check only to see results
- Easy comparison shopping
| Rates (APR) | 7.74% – 15.94% |
| Loan amounts | $1,000 – $200,000 |
| Repayment terms | 12 – 120 months |
Best Egg
Best Overall Secured Loan
Why we picked it
Best Egg’s vehicle equity loans are the best available. Best Egg is a reputable lender and lets you access up to 250% of your car’s value, with repayment terms ranging from two to seven years. Interest rates start at 10.99% and top out at 29.99% APR. Not the best loan terms available—but not awful if you’re in a pinch, and better than many competitors.
- Flexible repayment terms
- Manageable interest rates
| Rates (APR) | 5.99% – 29.99% |
| Loan amounts | $2,000 – $50,000 |
| Repayment period | 36 – 84 months |
| Time to fund | 1 – 3 business days |
| Fees | Origination fee of 0.99% – 8.99% of loan amount |
OneMain Financial
Best for Fast Funding
Why we picked it
OneMain Financial is a good option if you need money fast. While OneMain Financial advertises funding in one day, a secured loan may take a little longer because there’s more paperwork to process. Still, you should expect funds to cover your emergency faster than other funding sources.
- Flexible repayment terms
- In-person help at branches nationwide
| Rates (APR) | 18.00% – 35.99% |
| Loan terms | 24, 36, 48, or 60 months |
| Loan amounts | $1,500 – $20,000 |
Alternatives to car title loans and auto equity loans
Auto equity loans and car title loans can help in an emergency, but neither is ideal. Car title loans can especially be predatory. These alternatives don’t involve using your car as collateral.
Unsecured personal loan
An unsecured personal loan lets you borrow without using any collateral—not your car, your house, or anything else. However, the lack of collateral poses a higher risk to the lender.
That means the lender will:
- Have stricter credit score requirements for personal loans
- Potentially charge higher fees and interest than a personal loan with collateral
If your credit history is limited or poor, Upstart may be worth exploring. It’s our pick for the best personal loan for little to no credit, and the lender uses factors beyond your credit score to assess eligibility.
Home equity loan or HELOC
Home equity loans and home equity lines of credit (HELOC) sound similar to auto equity loans on paper. But rather than borrow against the equity in your vehicle, you borrow against the equity in your house.
However, home equity loans and HELOCs are considerably safer than auto equity loans because:
- They have lower interest rates.
- Houses tend to appreciate in value, while cars famously depreciate quickly.
- They have much longer repayment terms.
Qualifying for a home equity loan or HELOC requires better credit—and it also requires that you own a home with significant equity. If you’re looking for an emergency loan, this may not be the case.
If you’re a homeowner with available equity, a HELOC can offer flexible access to funds with lower rates than an auto equity loan. We recommend Figure as the best overall HELOC—it offers a fast online application, competitive fixed rates, and funding in as little as five days.
Payday alternative loan
Payday loans are downright predatory. The CFPB warns that their high fees can often be equivalent to a short-term loan with a nearly 400% APR.
Some credit unions offer an alternative, aptly called payday alternative loans (PALs). And as the acronym suggests, they’re a much friendlier option.
The National Credit Union Administration oversees the federal program behind these small loans and ensures they’re safe for borrowers. Two types are available to certain credit union members: PALs I and PALs II. Here’s a quick breakdown of these loans:
| PALs I | PALs II | |
| Max. interest rate | 28% | 28% |
| Max. application fee | $20 | $20 |
| Borrowing amount | $200 – $1,000 | $0.01 – $2,000 |
| Repayment terms | 1 – 6 months | 1 – 12 months |
Cash advance apps
If you need quick cash, it might be as easy as downloading an app on your phone. In recent years, cash advance apps such as Dave, EarnIn, and Brigit let you access a portion of your paycheck, ahead of payday. Some fintech banks, including Chime, have also made this a core part of their offerings.
There’s usually a subscription fee, a fee for fast funding, or an optional tip. The amount of money you can access isn’t huge, but it can help when bills come before payday. That said, you’ll get less money on actual payday, which means you may run out of cash again before your next payday—which can lead to a vicious cycle of borrowing.
Only use these apps if you’re in a real bind. Prioritize using the best cash advance apps, which have the lowest fees and fastest funding.
EarnIn is our top pick for cash advance apps. It lets you access up to $750 of your paycheck before payday with no mandatory fees, making it a flexible, low-risk alternative to auto equity loans.
Friends and family loan
Asking a loved one for money is a difficult conversation, but if you’re in financial trouble, it could be worth it, especially if the alternative is a high-interest loan like a car title loan.
Be clear about how you’ll repay your debt, prioritize repayment if they do lend to you, and be gracious and understanding if they say no.
FAQ
Can you get a secured loan with a car that’s not paid off?
Yes, you can use a car as collateral even if it’s not paid off, but the lender will typically require that you have equity in the vehicle, meaning the car must be worth much more than you still owe.
Are collateral loans easier to get?
Generally, yes. Because collateral loans are backed by an asset—such as a car—lenders take on less risk, making approval easier, especially for borrowers with lower credit scores. However, lenders still assess factors like your creditworthiness, income, and the value of the car before approving the loan.
Does the car need to be in your name to be used as collateral on a secured loan?
Yes, in most cases, the car must be registered in your name to be used as collateral. Some lenders may allow co-owners to apply together, but you typically cannot use a vehicle that belongs to someone else unless they are a co-borrower on the loan.
If I default on my car loan and it’s used as collateral, what happens to my secured loan?
If your car is already being financed and you default on that loan, the original lender has the first right to repossess the vehicle. This can put your secured loan at risk since the collateral (the car) would no longer be available to back the second loan. Some secured loan lenders may repossess the vehicle if the original lender does not claim it first.
Do loans using your car as collateral require a credit check and proof of income?
Most lenders will check your credit and require proof of income to assess your ability to repay the loan. However, some lenders, particularly those offering title loans, may not require a credit check but will instead base approval on the car’s value and your ability to make payments.
Recap of the best loans for using your car as collateral
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