What are the requirements to get a title loan?
A title loan is essentially a short term loan where the borrower submits their car as collateral. This collateral is then used in the event that the borrower defaults on the loan. These borrowers are typically consumers who have difficulty qualifying for other funding options.
This article will walk you through the requirements for applying for a title loan.
Original title deed
The first and foremost requirement for applying for a title loan is that you need a car. Together with the vehicle, you will need proof that you have sole ownership of the vehicle. This is because the car is used as a security. So if you default on the loan, the title deed will be used to effect the sale of the car and to settle the money.
The vehicle used as security must be registered. Lenders do not accept unregistered vehicles. So don’t make the mistake of buying unauthorized vehicles and then using them as effective security. Make sure you have the vehicle registration document to prove to the rental company that the vehicle you are using is fully registered. Also, make sure that all penalties, fees, tolls and taxes associated with the car have already been paid.
This is one of the most important requirements for applying for a title loan. In fact, it is required with every loan that you apply for. This is for the lender’s satisfaction that the applicant is able to repay the loan. Bank statements usually reflect the amounts in and out of your bank. This exactly reflects the individual’s ability to repay the loan. It basically shows your financial standing and thus helps with the evaluation of the loan.
Many lenders ask for references. This could be an indication of your good character. This is to ensure that you have a good moral standing in society and that someone is taking responsibility for you. This also advises the lender that the applicant is not engaging in any fraudulent activities that could cause financial damage to the credit institution. So make sure you get two good references before applying for the loan.
The bottom line
Listed above are some of the requirements that you must meet before applying for a title loan. However, the documents can vary from lender to lender. So make sure that you only take the list of documents from the lender. In addition, before applying for a loan, you should also read through the terms and conditions under which the loan is granted. This includes the schedule in which the installments are to be paid and the interest rates.
This article does not necessarily reflect the opinion of the editors or management of EconoTimes.