If you've been thinking about applying for car title loans online or going down to lender's office to fill out an application, it's important to know what the requirements are. That way, you can have everything you need ready and avoid making multiple trips. Title loans are known for the speed and convenience of the application process, and that means you there isn't much in the way of title loan requirements. This guide will cover what you need to get a title loan.
Before you can get a title loan, you'll need to show the lender your ID. Any form of government-issued ID will work here. A state driver's license or state ID are obviously the two most commonly used options, but you could also go with a passport or any other form of ID that you have. It's best to stick to government-issued forms of ID, because lenders may not accept anything else, such as school IDs.
There are two reasons that the title loan company needs you to show your ID before they can issue the title loan:
They must verify your identity because otherwise, they could have the incorrect borrower information on the loan. They'll also need to make sure that you're the real owner of the car.
They must check your age to comply with federal law. The federal government put into law that every title loan borrower needs to be at least 18 years old.
When you obtain a title loan, you're getting a type of secured loan. The term "secured loan" refers to any loan where property belonging to the borrower gets attached to the loan as collateral. This protects the lender, because if the borrower doesn't pay, the lender could repossess the collateral and sell it to recoup whatever money they lost on the loan.
In a title loan, your car functions as the collateral. You'll still have your car while you're repaying your loan, with the lender only having the car title. But it is important for the lender to see your car before issuing the loan.
One reason the lender needs to see your car is because they must verify your possession of it. If they don't see the car, there's no telling whether you even have the car anymore. In some states, lenders are also allowed to put a GPS tracker on the car when they issue the loan, allowing them to locate the car should they need to repossess it.
Just as important is the fact that the lender must evaluate the car's condition to figure out its value. Here's how they do this:
By determining your car's value, the lender can determine how much money they're willing to issue with the title loan.
The last step of the title loan process will be when you give the lender your car title, which they will keep in a secure place until you've finished paying off your loan. After that, you'll get your title back.
Since the lender doesn't keep your car while you pay back your loan, the car title is the only form of collateral they'll have.
That's not the only reason the lender needs to see your car title, though. They also need to verify a couple things. First, they need to check that the car is in your name. They also need to see that there aren't any other lienholders on the title. If there are, that lienholder would need to come with you for you to get a title loan.
If you're used to traditional loans, you may be wondering about whether you need to provide proof of your income and employment before you can get a title loan.
This varies from state to state. In most states, title loan companies aren't legally required to get proof of income from prospective borrowers. There are a few state where the law is different and title loan companies must consider the borrower's income before issuing the title loan.
Even if proof of income isn't required to get a title loan in your state, you should still make sure that your income is sufficient to pay back whatever you borrow. Otherwise, you would end up defaulting on your loan or going through multiple loan extensions.
The title loan application process is about as easy as it gets, and you won't need much besides a few basic items to get a title loan. If you have the three things we listed above, you should be good to go in most states, and the only other potential requirement is proof of income.
