What are the conditions for obtaining a title loan?
A title loan is basically a short term loan in which the borrower pledges his car as collateral. This collateral is then used against the debt in the event the borrower defaults on the loan. These borrowers are normally consumers who find it difficult to qualify for other financing options.
This article will walk you through the requirements of the title loan application.
Original title deed
The first and foremost requirement of a title loan application is that you need a car. In addition to the vehicle, you need proof that shows that you are the sole owner of the car. This is because the car will be used as collateral. Thus, in the event of default, the title deed will be used to effect the sale of the car and to set off the money.
The vehicle used under warranty must be registered. Lenders do not accept unregistered vehicles. So don’t make the mistake of buying unregistered vehicles and then using them as effective collateral. Make sure you have the registration document to show the lender that the vehicle used is fully registered. Also make sure that all penalties, fees, tolls, and taxes associated with the car are already paid.
This is one of the most important conditions for applying for a title loan. In fact, this is required in any loan that you apply for. It is for the satisfaction of the lender that the applicant has the ability to repay the loan. Bank statements normally reflect amounts entering and leaving your bank. This precisely reflects the ability of individuals to repay the loan. It basically demonstrates your financial standing and thus helps in loan appraisal.
Many lenders ask for references. It could be a reference to your good character. This is to make sure that you have a good moral reputation in society and that someone takes responsibility on your behalf. It also tells the lender that the applicant is not engaged in any fraudulent activity that could cause financial harm to the lending institution. So make sure you have two good references before you apply for the loan.
The bottom line
Above are some of the requirements that you must meet before applying for a title loan. However, the documents may vary from one lender to another. So, be sure to take the list of documents from the lender only. Also, before applying for a loan, be sure to also read the terms and conditions on which the loan is granted. This includes the schedule in which the installments are to be made and the interest rates.
This article does not necessarily reflect the views of the editors or management of EconoTimes.