On the Road to Approval
There are different types of loans, and each has its own uniqueness and advantage to ease the burden of financial emergencies. A title loan, especially, is one such loan that alleviates the worry of unexpected occurrences.
But before requesting a title loan, it is best to know the title loan requirements, so you’re sure about what you’re venturing into. These requirements must be fulfilled before you can access a loan. But before getting into the title loan requirements, let’s take a look at what a title loan is.
What is a Title Loan?
Title loans, otherwise known as car title loans or collateral loans, are usually short-term loans secured with little borrowing amounts to be repaid over some time. The unique feature of this loan is that title loan lenders do not require you to have a high-value asset or decline your access because of a sparse credit history.
As the name implies, the vehicle's title is the collateral needed to secure this type of loan. If your vehicle is in good condition, then it can be used as collateral, notwithstanding the available equity. Car title loans usually have a fast application process, offer same-day or next-business-day deposits and allow you to keep driving your car for as long as you’re faithful to paying your monthly debt.
Now that we’ve discussed what a title loan is, let’s look at how to access one.
Title Loan Requirements
The requirements for accessing a car title loan vary according to your location and the lender you intend to borrow from. Nevertheless, there are a few basic prerequisites common to all lending companies.
Proof of Ownership of Vehicle
It is not enough to muster the boldness of approaching a loan company to request a title loan when the vehicle you drive is not yours. The vehicle may have been handed over to you as a gift, but there must be evidence of ownership.
The lender will have to review the papers you presented and inspect the vehicle to assess its value. Also, they have to ensure there are no other liens on the vehicle, and you outrightly have full ownership before you can proceed with your application.
Government-Issued ID
The lender must identify you as a credible borrower before you can access the opportunity to take a loan. There are state laws binding each financial institution, and you must be at least 18 years of age to ensure you're legally able to take on the responsibility of signing a loan contract and making whatever repayment the loan accrues.
A government-issued Identification Card that best bears a tallying identity as the name on the car documents is needed to complete the application process. The most commonly accepted government-issued ID card includes the photo of the bearer, passport, driver’s license or any other valid means of identification. Extensively, such documents display the home address of the owner, their email addresses and their real age.
Steady Income
Your stream of income is another important criterion to consider during your car title loan application process. You will be required to present proof of income or proof of employment before continuing the process. The lender wants to be sure that you can pay your debts and that you’re not set up for failure when the contract isn’t kept.
Proof of Residency
Title loan companies do not operate in every state, so borrowers can only be allowed the privilege when they reside in the same state. To ensure this happens, borrowers are requested to provide a recent utility bill, mortgage agreement, property insurance policies, property tax statements or any other proof that validates their address as current.
Depending on the lender, you may also need to provide other documents like vehicle registration, proof of vehicle insurance, home equity and references, among others. All these are put in place primarily to fulfill the state’s legislation regarding borrowing and to ensure no one loses from the bargain.
What to Expect When You Get a Title Loan
Every loan has its uniqueness, so you should consider its pros and cons, weighing them carefully before you decide to approach a lender. To help you further decide your options, here are some advantages of taking a car title loan:
Easy Application Process
With technology and its constant evolution, most lenders now have a website with an active online presence that allows borrowers access to all the assistance they need from the comfort of their homes and at their own convenience. This means you can easily do research on the best lending company that suits your needs and call or chat them up for assistance on how to get your desired car title loan.
Fast Approval
Keep in mind that not all lending companies have the same waiting period for approvals. Some car title lenders offer pre-approval services, which enables the company to ascertain if you qualify for a loan without affecting your credit score. Once you’re pre-approved, you’ll be expected to provide the needed documents for the company to know the loan amount and terms and complete the paperwork for the money to be transferred to your account.
Flexible Terms of Repayment
Lenders are usually kind enough to offer flexible repayment terms. So you don’t have to break your neck before you finish paying your debt. They sometimes even help the borrower fix their loan plan if things don’t work out well with them financially.
Keep Your Car to Yourself
As long as you keep fulfilling your end of the bargain by making regular monthly payments to cover the cost of the loan, its interest and associated fees, you can continue driving your car.
While there are many pros, here are some cons:
Debt Trap
Once you get into the bandwagon of borrowers, it is often hard to come out of it unscathed. To pay outstanding debts, most borrowers continue to take new loans to settle the old ones, hence repeating a cycle of debt collecting they can’t get out of.
High Interest Rates
Title loans, to a great extent, are different from traditional loans. A traditional loan can give you a period of six months to three years before you pay it off, but a title loan gives its borrowers 15-30 days, wherewith there must have been a high accrual of interest and other hidden charges to be paid.
Loss of Ownership of Your Vehicle
Car title loans allow you to stay on top of your repayment game or lose your car when you can’t meet your responsibility. The fees continue to pile up to a frustrating amount, and if you’re not careful, you may have to say goodbye to your vehicle.
Your Car, Your Loan
In conclusion, title loans are easy, short-term loans with a quick process that allows anyone to borrow a small amount of money from the convenience of their home. While it is a great option to fix temporary financial problems, you must remember it isn’t for anyone who doesn’t have the financial capacity or money to cover the cost of the monthly repayment plan as agreed upon with the lender. It’s best to thoroughly weigh your options before jumping in.
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