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Auto title loans: What they are, how they work, the typical borrower, and where they’re offered

• What they are: Short-term, high-interest loans that use your vehicle as collateral.

• How they work: Typically, borrowers must own the vehicle outright. No credit checks and minimal proof of income are required. The borrower hands over the vehicle’s pink slip until the loan is repaid.

• Typical borrower: Takes out a 30-day loan of $1,042 that’s renewed eight times, paying back $3,391 – triple the amount borrowed.

• Where offered: 29 states and Washington, D.C., do not allow auto-title loans or severely limit interest rates. A number of online lenders operate offshore or on Indian tribal lands, where they’re not subject to U.S. regulations.