Are you short on cash and worried you might not qualify for a title loan?
Around 2 million people take out title loans every year, making them one of the most popular forms of emergency cash. The good news is that title loan requirements are much simpler than traditional bank loans.
Problem
Believe it or not, most people are under the impression that the entire approval process is going to be long and tedious. This, however, is far from the truth as the qualifications are in fact much simpler.
In this article, I’m going to be breaking down exactly what it takes to qualify for a title loan and take you through the process step-by-step.
What you’ll discover:
- Must-Know Title Loan Requirements All Borrowers Need
- Title Loan Qualification Criteria: How To Meet Them
- Approval on the Same Day: Fastest Way To Get Approved
- Required Documents for Title Loans: Documents You Must Have Ready
Must-Know Title Loan Requirements All Borrowers Need
If you’re asking yourself how can I qualify for a title loan? I have the answer for you. The most effective way is to meet the basic title loan requirements. Whereas bank loans will look into your credit history and financial background in depth, title loans are a lot more simple.
Requirements are based on three things:https://networthprosper.com/what-you-need-to-know-before-applying-for-a-payday-loan/
Your vehicle will be used as collateral, speeding up the process. The majority of lenders will not run credit checks due to this fact and will be less concerned about your credit score.
Clear Vehicle Title In Your Name
This is a big one as you will need to own the vehicle outright and have the title listing you as the sole owner.
This is important as:
The lender will have no issues approving you if the vehicle is yours as it won’t have any other claims on it. Although there are lenders that will work with a small amount on the car loan, it is always better to have a car that is free of any loan before applying.
Your title will need to be:
- Free of liens
- Issued to you legally
- Not expired
- In good condition without any damages or writing on it.
This is due to the fact that documents needed for title loans will see your title being used as security for the loan. It is then made known to you that it will be held by the lender until your loan is repaid.
Valid Government-Issued Photo ID
When applying for a title loan, you will also need to bring an identification. This may sound obvious but many people neglect to do so.
Acceptable photo identification include:
- Driver’s license
- State issued ID card
- Passport
- Military identification.
Your ID will need to be up to date and with the same name as your vehicle title. Any missing information or discrepancies will cause the approval process to be delayed or have a decline in decision.
Proof of Income Source
Where things get more interesting is this area as you are not required to have a traditional job to qualify.
Lenders will want to see you have some form of regular income, but are flexible when it comes to what this will be.
Proof of income may include:
- Employment paystubs
- Social Security benefits
- Disability payments
- Retirement income
- Self-employment
- Unemployment benefits
Although there is a wide range of acceptable options, they all have the same goal. To show that you are able to make the monthly payments to the lender. Typically lenders will be looking for an income that is at least double your monthly repayment value.
Title Loan Qualification Criteria: How To Meet Them
Qualifying for a title loan is much easier than you will probably imagine as the qualifications center around your vehicle value and your ability to repay as opposed to your credit history.
Vehicle Value and Condition Requirements
Your car will value the amount that will be lent to you. The standard range is 25% to 50% of your vehicles overall market value.
Requirements include:
- Make/model/year
- Mileage
- Condition
- Market desirability.
The newer the car and the lower mileage, the more the car is worth. However, there are many lenders that will offer loans against older vehicles.
Income Verification Standards
Income requirements are much lower than you will think as for most lenders you need a minimum of $1,000 monthly income.
Acceptable forms of income include:
- Pay stubs (30 days)
- Bank statements with deposits
- Benefit award letters
- Tax returns for the self-employed.
Although all lenders will be looking to ensure that you can meet the monthly payments.
Residency and Registration Requirements
You will have to be a legal resident of the state you are applying in. Your vehicle registration will need to be up to date and in your name.
Approval on the Same Day: Fastest Way To Get Approved
Approval on the same day is more than possible with a title loan. For the average title loan of $1,000, borrowers spend approximately $1,200 in fees, it is always worth it taking the time to do the process right.
Gather Required Documents First
Beforehand before you apply it is essential to have all the documents ready.
Before you apply be sure to collect:
- Vehicle title (original not copy)
- Government issued photo ID
- Proof of income (30 days)
- Vehicle registration
- Proof of residence (utility bill can work here).
Collecting these prior to application will mean the process of approval can go much faster.
Choose the Right Lender
Not all title loan lenders are the same and although some will be more strict with requirements, others will be more lenient.
Look for lenders that provide:
- Same day approval
- Competitive interest rates
- Flexible repayment.
Researching several lenders before you make your decision is recommended as the first lender is not always the best.
Complete the Application Process
Applications take less than half an hour to complete. It is standard to begin the application online and then go in-store to finish the rest of the process.
Typical steps are as follows:
- Complete the basic application
- Provide documents.
- Vehicle inspection/appraisal
- Review and sign loan agreement
- Receive your cash
Be sure to be honest when filling out the application as lies (especially with income) will backfire at verification.
Required Documents for Title Loans: Documents You Must Have Ready
Preparation is the key as applications for a title loan are concerned as many applications will be delayed or rejected due to missing documents.
Primary Documentation Checklist
You will need the following four items.
Vehicle title: This must be clear, current and in your name.
Photo identification: Up to date driver’s license or state ID to match your title.
Income verification: Pay stubs, benefit statements or bank deposits within the last 30 days.
Vehicle registration: Up to date and registered in your name.
Secondary Documents That Help
These can help you but are not required
- Vehicle insurance policy
- Utility bill for address
- References with contact numbers.
Extra documentation will help show lenders you are organized and serious about repaying.
Vehicle Inspection Requirements
Every lender is going to have to carry out an inspection on your vehicle.
During this inspection, they will want to check:
- VIN number
- Current condition and mileage
- Existing damage
- General market value.
This will usually take place at the lenders premises and will take approximately 15 minutes.
Making Smart Title Loan Decisions
Title loans can be an easy way to get fast cash when you are in need. However, with average interest rates of 300% APR, they are a much more expensive option compared to traditional loans.
Before you commit be sure to:
- Calculate your overall cost of borrowing.
- Be certain that you will be able to make the repayments.
- Have a plan to repay.
Title loans work best when they are short-term financial emergencies with a plan to be paid back as quickly as possible.
Time To Take Action
Title loan requirements are simple as the main ones are owning your vehicle outright. Valid identification, proof of income and being prepared for the application.
Key to being successful in applying for a title loan is preparation. Collecting all of the required documentation prior, researching different lenders and understanding the terms fully.
Remember:
- A clear vehicle title is a necessity.
- Income verification does not mean having to have a full time job.
- Approval on the same day is possible with the correct preparation.
With the right amount of preparation and documentation, you will be able to get through the entire qualifying process smoothly and get you the cash you need at a time where you need it the most.
