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What are the requirements to get a title loan?
A title loan is essentially a short term loan wherein the borrower submits his car as a collateral. This collateral is then used against the debt in case the borrower defaults on the loan. These borrowers are normally consumers who face difficulty in qualifying for other financing options.
If you are living in a region which allows you to procure title loans, then it is important that you are familiar with the process. A lot of potential applicants ask on how to get a car title loan.
This article will take you through the requirements of applying for a title loan.
Original title deed
The first and foremost requirement of applying for a title loan is that you need a car. Alongwith the vehicle, you need some proof which shows that you have sole ownership in the car. This is because the car will be used a collateral. Thus, in the event you default on the loan, the title deed will be used to effectuate sale of the car and make up for the money.
The vehicle which is being used as a collateral must be registered. Lenders do not accept unregistered vehicles. Thus, do not make the mistake of purchasing unregistered vehicles and then using them as an effective collateral. Make sure you have the registration document to show to the lender that the vehicle being used is registered completely. Also ensure that all penalties, fees, tolls and taxes that are associated with the car are paid already.
This is one of the most important requirements of applying for a title loan. In fact, this is needed in any loan you are applying for. This is for the satisfaction of the lender that the applicant has the ability to repay the loan. Bank statements normally reflect the incoming and outgoing amounts from your bank. This accurately reflects the ability of individuals to repay the loan. It basically demonstrates your financial standing and thus, helps in evaluation of the loan.
A lot of lenders ask for references. This could be reference to your good character. This is to ensure that you have a good moral standing in the society and someone takes responsibility on your behalf. This also indicates to the lender that the applicant is not engaged into any fraudulent activity which can cause financial harm to the lending institution. Thus make sure that you get two good references before applying for the loan.
The bottom line
Above are some of the requirements that you need to comply with before applying for any title loan. However, the documents may vary from lender to lender. Thus, make sure you take the list of documents from the lender only. Furthermore, before applying for any loan, make sure that you also go through the terms and conditions on which the loan is being given. This includes the timeline in which the installments are to be given and the interest rates.
This article does not necessarily reflect the opinions of the editors or the management of EconoTimes