Can you scrap a car with a title loan?


Some cars are just so outdated or in such poor conditions that you absolutely need to get rid of them. There are some models which require a lot of repairs and major changes in them. This can cost huge sums of money which most people prefer to not get into. This is why scrapping of the car is preferred but can you scrap a car with a title loan?

Scrapping a car which has turned into useless junk can be a tedious task. It becomes even more complicated and tiresome to scrap the car with a title loan. When a person takes a title loan, the loan is given on the basis of the car. This means that as long as the loan has not been repaid, the car does not have an open title and belongs to the bank.

Donating a Car with Title Loan

Instead of scrapping the car as some junk, some people assume that it can be donated to a certain charity. Even though this may seem like a viable option, it is not. This is because no one will be willing to accept a car which is worth nothing as compared to the loan it has against its title. The true ownership of the car belongs to the lender and they can cancel your charity as well. Similarly, if a car with a title loan is given away for scrapping, the junkyard will not accept the car either.

Also read: How much can I get for a title loan

Scrapping a Good Condition Car with Title Loan

No matter what the condition of the car is, the car cannot be scrapped with a title loan. The only condition in which a car can be scrapped is that if the borrower gets the amount which they need to give back to the lenders. If that can happen, it is important to get approvals from the lenders beforehand. There is no option for a car to be scrapped with a title loan. The borrower does not have the freedom to make his own choice. The concept is simple: The lenders gave you the money against the car, and they either want their money back or they want the ownership of the car. Even if they do not want the car, the borrower must pay the lenders back under all circumstances.

Scrapping a Car in Worst Case Scenario

Sometimes, cars may get into very bad accidents and are destroyed up to some extent. Now you have a car in very poor condition and have no other option except for scrapping it. Unfortunately, there is a title loan on your car as well. In order to get rid of this car, following steps can be taken in order to ease out the process.

1) Consult the Bank

The first and foremost step that needs to be taken is to discuss the situation with the lender. They need to give approval of your condition. Only then you can scrap the car and get rid of it. Even if they do not give approval to your request, they might be able to come up with a plan that suits your requirements as well and at the same time satisfies their terms and conditions as well.

2) Calculate the Debt

There is a high chance you have paid off much of the debt that you owe to the lending organization or individual. When scrapping off the car with the title loan, it is important to know how much debt has been paid and how much is still pending. If you can afford the amount, then you can request to pay back the lending organization or individual the remaining amount in one go.

3) Give Up Ownership

Since you were going to scrap the car anyways, it is best to give up the car and hand it over to the lender. This way, they can keep the car and your loan can be paid off. You can even drop it off to the location you desire such as a junkyard and ask the lender to pick up the car from that place. But it is important to discuss everything with the lender beforehand and get their approval as well.

4) Request Certified Letter

Explain your situation to the lender. There are certain times when a situation is very dire and lenders might agree to your terms. If they cooperate with you and define some terms with you, you can request a certified letter. If they provide the letter, you can show it to the junkyard and get your car scrapped. But in any other condition it is not possible.


Following the simple tips mentioned above can help in easing out the process of scrapping a car with the title loan but it is not the ultimate solution. They are not bound to work out in every scenario. When there is a title loan on your car, it is important to remember that you do not own the car under any circumstance. The ownership always belongs to the lender. The title of the car is not open and thus does not belong to you either. This is why no transactions such as lending, scrapping, or even selling of the car can happen. It can only occur in three conditions; if the lender approves of it or if the loan title has been cleared off from the car. Apart from these conditions, it is not possible to sell the car under a person’s personal wish.

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