Preparing to Get a Title Loan
Emergencies can and do happen. If you don't have the cash to cover one — and a bank loan is out of the question — a vehicle title loan may what you need. All you need is a vehicle in your name, a lien-free title and income for loan repayment. But there are a few other requirements. Here's what you should know about preparing to get a title loan.
Explain Title Loan
This is a short-term loan, usually of a month or less, that uses your vehicle as collateral. Thus, if you don't repay the loan in a timely fashion, you could lose your vehicle to your lender who will sell it to cover their losses. So, just be certain you can pay the loan back before signing off on one.
The good news for many borrowers is that because of such security, approval rates are high. Even lenders who conduct a credit check won't focus on your scores, since they're not that worried about risk.
Note, too, that while your vehicle — whether it's a car, boat, RV or motorcycle — serves as collateral, you may keep driving it during the life of the loan, as long as you're making payments. This is in contrast to pawn shop car loans, which require you to turn over your ride until the loan is repaid, with interest. With title loans, the lender will merely hold onto your vehicle's title.
How Much Can I Borrow?
Your credit really isn't an issue, so the amount you can borrow hinges primarily on the lender. Other factors include the state in which the lender is located, your vehicle's make, model, mileage, age, and overall condition. Most loans are for $1,000 or so, although the range is usually between $100 and $10,000, or between 25% and half your vehicle's value.
You can run a search for “title loans near me” to learn more.
What Do I Need for a Loan?
Most title lenders will permit you to apply for a loan online, from the comfort of your home or office. So, you'll need to gather some documents and materials beforehand. In addition to a title showing you own your vehicle outright, you'll need a government-issued photo ID and proof of residence (utility bills and the like).
Depending on the lender, you also may need proof of vehicle insurance and a few professional or personal letters of recommendation. Further, you'll need to supply photos of the vehicle from all angles, including interior shots, along with the odometer and vehicle identification number.
Lenders do require proof that you can repay the loan. Here, pay stubs or bank statements will suffice. Most title companies will also allow alternative sources of income such as worker's comp, rental income, self-employment, a pension, or disability insurance.
What About Interest Rates?
These depend on the lender and where they're based. However, the average rate is 25% of the loan total. This comes to 300% each year, but because most loan terms are 30 days or less, it's likely you'll never face the full 300% rate.
How Fast is the Loan Process?
The expediency of title loans is a chief feature. Once you've submitted all your data and materials, and everything looks good, you can be approved within minutes. Following that, most title loans are paid by the following business day. You'll likely have options in terms of payment, including in-person pickup, a wire transfer, or direct deposit. For the latter, be certain your bank account can handle ACH transfers.
In all, preparing to get a title loan simply means pulling together a few documents and materials. What's most important is that you have a vehicle you own outright and the ability to pay the loan back.
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