A title loan may seem like a quick fix when you have to get cash and in the shortest time possible. Those loans enable you to take a loan citing the title of your vehicle as a security. However, to make sure that you would be approved quickly and easily, there are several documents that you should prepare before you apply. Having the knowledge of what is needed does not only save time but also helps to avoid delays which may cost you a precious opportunity.
Wondering what you need to get a title loan, you have as well come to the right place to get all the documents you need to show ownership, ID, and any other documents needed to be approved by the lenders without any fear of being rejected.
What Is a Title Loan?
Title loan is a short-term secured loan which takes the title of your car, motorcycle or truck as a security. This implies that you are provisory transferring possession of your car in lieu of a loan. Your level of borrowing will be based on the value of the vehicle, its condition and equity.
As long as you continue driving your car, the title is retained by the lender until the time you pay the loan. Such loans are normally applied in emergency costs, bills or temporary cash crises. Nevertheless, being the high-interest and short-term ones, they must be taken with moderation and a full knowledge of the conditions.
Why Lenders Require Documents?
Title loans are secured, a lender is required to verify the ownership and the car is not given to another loan or lien. A good documentation safeguards you and the lender because it will establish the fact that the asset is legally yours.
It also assists in confirming that you can repay, the authenticity and that the vehicle complies to the legal lending criteria. The lender cannot go without proper documentation, which is why it is necessary to prepare all the necessary documents and apply to it.
Primary Documents that are needed to secure a Title Loan
The vehicle title is the most valuable document in case of title loan – it should be in your name, it cannot have any lien against it and it should be registered. But that’s just the start. We are going to discuss one by one of the documents required and its importance.
Title (Proof of Ownership) of Vehicle
The loan process is supported by the vehicle title. It entitles to show that you are a lawful owner of the car, truck, or motorcycle, which is used as collateral. The lender will put a temporary lien on the title until the loan period is over and the lien will be removed after you pay the entire loan amount.
Unless your title has been clarified to include only you, the lender or co-owner, then you will have to clear before you apply. An unencumbered title is fast to approve.
Government-Issued ID
To identify with the lender, you are required to show a valid photo ID issued by the government, e.g. the driver license, passport or state ID. This measure helps to avoid fraud and make sure that the applicant and the car owner are one.
In other instances, when the vehicle is registered in a business, the lender might require the presentation of more documents to confirm the ownership and right to borrow in the business.
Registration and Insurance of Vehicles
Your car has to be insured and registered under your name. The lender can perform a check of your registration to ensure that the details on the vehicle are similar to your title and ID.
Insurance is also very essential as it provides protection to the lender and you in case of any damage or accident in the term of a loan. Some lenders would not grant you with your application unless you are actively insured.
Proof of Income
Even though there are title lenders who do not at all insist on the verification of income, majority of the responsible ones do. They would want to see that you have a stable income to pay back the loan within the right time.
You may submit latest paychecks, financial records or invoices of self-employment. There are also instances where evidence of social benefits, or pension revenue can also suffice. An income demonstration can also increase approval rates and potentially improved conditions.
Proof of Residence
Most lenders will require evidence on your residence, to confirm your address. It is significant in terms of contacts and adherence to lending standards. You may use latest utility bill, lease agreements or mail where your name and address is listed.
In case you have just moved, remember to carry copies of both previous and new locations of residence so as to prevent instances of confusion during the check-in process.
Photos or Inspection Report of Vehicles
Most lenders insist on pictures or a physical inspection of the vehicle to ensure that it is in good shape. This will assist them in determining the present value of the same in the market and making sure that it is in line with the description you have on your title and registration.
Online title loan companies are accepting of online photos rather than on-site. It is important to get the exterior, interior, odometer, and VIN (vehicle identification number) that will be accurate.
The title loan application can be expedited in several ways
In order to be approved within a short time, make sure that your documents are precise and current. The process can be slowed down by even minor errors, such as typing in an incorrect name or an incorrect address. It is always good to carry original copies and in case, scanned copies can be easily submitted.
It is also used in communicating with the lender in advance and requesting them to send their documentation checklist. All lenders are slightly differentiating in accordance with local regulations and company policies.
Online pre-application saves time when attending the branch or completing the loan online as well as requires the proper details to be entered into the online pre-application.
What Will Be the Next Step After You had submitted your documents?
After presentation of your documents, the lender will check ownership, check the vehicle and ascertain your source of income. In the event all is in order, you will be offered a loan depending on the value of your car, not more than 25 percent-50 percent of the estimated value.
Then you are able to review and sign the agreement on the loan. The money is usually extended in less than 24 hours and you keep on using your car as normal by paying regular installments. Once the lien is repaid in full, they are removed and your title is once again returned to you.
Common Mistakes to Avoid
Presenting obsolete or unfinished documents is one of the errors that are most frequent among applicants. The other one is not reading the loan agreement. It is imperative to check the interest rates, fees, and conditions by which repayment has to be made twice before one signs.
Do not borrow a lot than you can pay because defaulting on the repayment can make it hard to own your car. Good borrowing helps in preserving your assets and credit.
Conclusion
The title loan is an easy way to get an emergency cash, but one should prepare. Preparation of all the documents required makes it run smoothly and quicker to allow approval.
Using your title of vehicle, ID, registration, insurance, income evidence, and residence validation, you prove to me that you are responsible and credible; these are the two most important factors that the lenders consider.
Always deal with well known lenders who do not hide their terms. A financial need that seems to be a stressful situation can be transformed into a short-term solution with the help of the proper preparation and perception.
