What is a Title Pawn in Canada?



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There are several types of loans in Canada to ease different financial situations; among them is a title pawn. When you seek out a loan, you have to put down collateral; an asset is the only form of collateral acceptable for a title pawn.

Also known as a title loan, a title pawn is a short-term high-interest loan. This loan’s basic collateral requirement is an asset in exchange for money. Your credit score does not influence whether you get approved or not for a title pawn.

Although, there are other requirements you might want to check. This article will walk you through what you should know about title pawn in Canada.

What is a Title Pawn?

A title pawn (title loan) is a secured loan that allows borrowers to put down their assets as collateral. It is a financing alternative for borrowers who don’t qualify for other financing options. The most prominent form of title pawn is a car title loan.  

A title pawn uses your vehicle to secure the loan repayment; this means that your lender can repossess your car if you fail to make timely repayment of your loan.

Generally, title loans are short-term high-interest loans with lesser requirements compared to other financing options. Your lender does not evaluate your credit score and history before approving you for a title loan. This means even with a poor credit score; your lender will still consider you for a loan.

A title pawn is similar to a payday loan as they both usually span 30 days. In exchange for funding, you’ll give your lender the title to your car until you repay the whole loan. The application process for this loan is brief; it takes about 15 to 45 minutes to finalize. Let’s take a look at how title pawn works in Canada.

How a Title Pawn Works

A title pawn is very easy to process; you put down your car in exchange for money. To process a title pawn, you’ll bring your vehicle and all necessary documents to the lender.

You can process your application online or physically. Note that even if you submit all required documents online, you’ll still need to verify the car’s condition and completeness of your documents with your lender.

Once your car meets your lender’s requirement, your lender keeps the vehicle’s title, puts a lien on it, and releases the funds you’re requesting. You must prove your identity and ownership of the car and provide at least two references before you qualify for a title pawn.

Once your lender takes your car’s title, they might install a GPS tracker on it – this is dependent on your province in Canada. This is a means used to reduce the lender’s risk and aid them in potential repossession.

Requirements for a Title Pawn

When processing a title pawn, you’ll need to provide some documents. Below are the requirements for a title pawn:

  • Proof of vehicle insurance
  • Inspection of the car
  • Recent income statement
  • Original car title
  • Current car registration 
  • Government-issued photo ID
  • Recent utility bill or proof of residency 
  • Proof of Insurance
  • Eligible asset – motorcycles, boats, recreational vehicles, trailers, heavy-duty equipment, cars, etc
  • Extra set of vehicle keys
  • Valid names, phone numbers and addresses of references (at least two)

A title pawn is the same with the following terms:

  • Car title loans
  • Auto title loans
  • Vehicle title loans
  • Vehicle collateral loans

Average Cost of a Title Pawn

Although title pawns are one of the easiest ways to get funds, they can also increase your financial crisis if care is not taken. Generally, a title loan limit is about 25% – 50% of your vehicle’s cash value.

Note that your lender requires you to repay your loan plus fees and interest within the stipulated period; this is usually 30 days.

Once you’re able to repay your loan within the time frame, you can reclaim your title lien-free. A tile pawn amount usually ranges from CA$1,000; you can get a higher sum depending on your request and car.

Generally, title loans charge about a 25% interest rate monthly, which brings it to a 300% annual percentage rate (APR). You can repay your loan with a single payment (after one month) or on a multi-year installment plan. If you fail to repay your loan, you’re can will be repossessed.

Some lenders now allow borrowers in default to make interest-only payments for one month. This indefinitely forwards the loan amount until it is repaid. Note that you can still use your car during the repayment period.

You can repay your loan in person or online via your lender’s website. Alternatively, you can authorize an automatic withdrawal from your bank towards your repayment. Repossessed cars are usually sold to get back the money borrowed.

Pros of a Title Pawn

Tile pawn has its advantages as it has always come in handy for people who need money urgently. Below are some of the benefit of a title prawn:

  • Absence of Credit Check

Most title loan lenders do not require a credit check; you’ll not have a hard pull on your report. This is a great perk because you can borrow money from them even when you’ve run out of other financing options. Basically, you don’t need to have an excellent credit score to qualify for a title pawn.

  • Easy access to Funds

Title loans are swift and easy to get since there is no credit check. It takes few minutes for your lender to review your application and vehicle. Once you meet all requirements, you’ll get your money almost immediately or within some days.

Cons of a Title Pawn

Are title pawns too good to be true? Let’s check out some of the disadvantages of title loans.

  • Possible Debt Trap

Title loans can be a potential debt trap to borrowers as they might continue to take out new loans to repay the old ones. This will become a vicious cycle, unending. It might pose challenging to get out of the debt. 

  • Short Repayment Period

Your lender expects you to repay your loan with 15 to 30 days of taking out the loan. Compared to a conventional loan that gives you a repayment window of six months to three years, title loans repayment term is very short.

A title pawn repayment period does not provide enough room to source money to repay the loan borrowed, not forgetting the high-interest you have to pay.

  • High chance of losing assets

Coupled with the cons mentioned above, you could lose your asset if you cannot repay your loan. A title pawn can put you in a huge debt where you’ll have no choice but to forfeit your car. Hence, it is advisable to make timely payments to avoid potential debt and repossession.

  • High-interest rates and fees

The fees and interest rates attached to title loans are high. Their APRs can go as far as 300% due to interest rates, finance charges, among many other fees. These charges eventually add up and put more financial burden on you. Some of the fees you’ll be charged for include: 

  • Vehicle evaluation fee 
  • Title search fee
  • Administration fee
  • Roll-over fee
  • Registration fee
  • Installation fee

Alternatives to Title Pawn

As tempting and easy Title loans might seem, you should always check out other financing options before signing up for one. There are tons of better financing alternatives available. Some of them include:

  • Credit cards
  • Peer-to-peer loans
  • Short-term bank loans 
  • Personal loans
  • Credit card cash advances
  • Loans from family and friends


Title pawns are one of the easiest and fastest ways to get financing as a car owner. The application process is straightforward, and approval is almost guaranteed once you meet all requirements.

However, it is essential to note that it comes with a high-interest rate and other fees that might jeopardize the aim of taking out the loan.

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Kareena Maya

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Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.