• The Rundown on Auto Pawn Loans

    An auto pawn loan rollover is part of a typical auto pawn loan or car title loan agreement, where a potential car buyer uses their existing vehicle as collateral to secure auto loan terms for a new purchase. An auto pawn loan is sometimes called a balloon payment car loan because lenders will request a lot of money at the end of the short loan term. These are also called bad credit car loan options because lenders offering auto pawn loans are less likely to assess the borrower’s credit history.

    Auto pawn loans often include “rollovers” for flexible repayment terms and it’s great to know about how rollovers work to avoid some problems that they can cause. For some people, an auto pawn loan might be great, but for others, it can be dangerous.

    What Are Auto Pawn Loan Rollovers?

    In exchange for quick money, an auto pawn loan usually includes very short repayment terms, often just a couple of months. After this initial repayment period, something called a “rollover” kicks in. What happens in a rollover is that the unpaid balance goes into a new loan term, often with a much higher interest rate. Here are some of the common benefits and drawbacks of dealing with this kind of loan.


    In general, auto pawn loan rollovers take the pressure off of borrowers. With a rollover period, the customer gets an additional amount of time to repay their loan without negative credit effects or other consequences. This can be helpful when a cash crunch lasts longer than expected.

    Unlike conventional pawn arrangements, where those pawning objects need to give up those assets, an auto pawn loan uses a car title to secure financing. That means the driver can continue to operate the vehicle that they may need to commute or transport family members while they are paying off an existing loan with multiple auto pawn loan rollovers.


    One of the major issues with an auto pawn loan is that in many cases, these loan types get customers involved in a debt they can’t pay back for a long time. Government and consumer advocate groups are trying to help, but in many cases, customers still get involved in “bad loans,” where interest gets out of control. The way it works is that an auto pawn loan rollover can include a higher interest rate than the initial loan. With multiple rollovers, customers may incur interest rates in excess of 100 percent. With the short time frames included in an auto pawn loan rollover, it doesn’t take a lot of research to see how a modest auto loan can result in astronomical debt that a family can struggle with for years.

    Along with the above loan structure that includes a lot of financial danger for customers, vendors involved in auto pawn loans may include some confusing language and terminology in an agreement. This does not prepare borrowers for the eventual consequences of getting quick money for their auto loan.

    While auto pawn loan rollovers provide easy money, it’s critical for consumers to avoid getting caught up in agreements that will inundate them interest. Being your own advocate is critical for any kind of car loan process where the products that lenders offer can be slanted toward the lending interest and away from what might work best for the borrower.