Recent studies show that the average American can’t afford a sudden expense of just $400.
If you’re among them, you’re likely struggling with choosing between paying your bills on time and having to pay for things like medical care, groceries, and even your education.
With a car title loan, you don’t have to make impossible choices like this one.
Instead, this type of loan can help you to get an influx of fast cash when you need it by using your car as collateral.
Of course, there are several title loan requirements that you need to be certain you meet in order to be qualified for approval.
So, what do you need for a title loan?
Read on to find out.
What Is a Title Loan?
Before we speak about title loan requirements, let’s make sure you’re clear on what a title loan is and what it can be used for.
Title loans are short-term loans where you need to put something up as collateral in order to be approved for the loan.
Most commonly, title loans are used to help those who are going through a financial hardship and want to put up their car as collateral in order to be approved for a loan.
You own the car, but you’ll sign it over to your title loan company (like Southwest Title Loans). In exchange, the lender gives you a loan for up to 1/4 to 1/2 of the total value of the car.
But if you default on your loan, the lender can keep your car’s title.
This means that the car itself serves as the loan’s collateral.
Of course, you can expect to pay initiation fees and higher interest rates than other kinds of loans with a title loan. You’ll also have a shorter repayment period than you might like — in most cases, it’s just 30 days.
This means you’ll need to be certain you can pay off the total loan balance in about a month. Make sure you take out as little money as is possible to avoid falling into a financial trap.
The Benefits of Car Title Loans
Why do so many people opt for car title loans as opposed to other types of financing and emergency lending?
First of all, because the application and approval process is incredibly fast. In many cases, you can be approved for a loan the same day that you apply.
Additionally, car title loans usually don’t require you to undergo a credit check. This is especially convenient for those who don’t exactly have the kind of credit score they’d like, and who are afraid that their poor credit would mean a loan denial.
You can use car title loans for anything you wish, be it paying for prescriptions, financing a funeral, or even moving to a new home. Unlike other types of loans, there are no regulations on what you can and cannot use the money for.
Don’t worry — you’ll still be able to use your car during the lending process. You don’t need to drop your car off at a lot, picking it up only once the loan has been repaid in full.
You only lose your car if you cannot pay back the loan.
Many people also prefer title loans because they’re substantially cheaper than cash advances.
Basic Title Loan Requirements
Now, let’s discuss what is needed for a title loan.
First and foremost, you’ll need to be the owner of a car, and your name must be on its title.
Your car cannot have any current liens on it.
What about it your car’s title has someone else’s name on it in addition to your own?
Current requirements for title loans state that as long as both people are present and boh sign the loan documents, this is acceptable.
You’ll also need to prove to the lender that you have a current and steady source of income. A letter of employment, pay stubs, or even proof of investment accounts that generate monthly payments you live off of will suffice.
You are also required to be at least 18 years of age and a legal resident of the state in which you’re applying for the car title loan.
As of this writing, members of the armed forces or the Coast Guard are not able to apply for car title loans. You may also not be an active duty military member, or depend on the income of someone who is.
You’ll also need to bring your state identification and proof of residence (in most cases, a piece of mail will suffice.)
Keep in mind that each state and lender will have specific title loan requirements.
Make sure you follow understand all of these requirements and that you’re confident you can afford both the fees and the interest rates associated with the loan.
Is a Car Title Loan Right for You?
Now that you have a deeper understanding of both car title loan requirements and the benefits of applying for one, it’s time to decide if it’s the right move for you.
Applying for a loan isn’t a decision to be made lightly, but for many in a serious financial bind, it’s the best possible option.
Of course, there are many different types of loans you can explore to finance your home, the purchase of a new car, your education, and much more.
Curious to learn more about them?
Our blog can help make that happen.
Bookmark our page to stay in-the-know about all the latest lending options, and take charge of your financial future today.