subject: What To Do To Have A Title Loan Approved [print this page] Today, there are many types of loans such as mortgages, personal loans, auto loans and many more that are available to people experiencing financial difficulty. Each type of loan has unique terms and conditions and is designed for specific clientele. Some loans take a longer time to approve, like those offered by traditional financial institutions such as banks. Others, however, such as title loans and payday loans, provide quick funding solutions to those in dire financial need. A title loan is in many ways similar to a cash or payday loan, but requires a borrower to provide collateral or security in the form of a valued property's title in most cases, a car title. The title provided is expected to be clear or free, meaning that if it is a car, it has been completely paid for with no current financing or liens.
Requirements for the approval of a title loan
Apart from pledging a car's title, a borrower may also be required to provide proof of employment or some other source of income to receive the loan. Also, a majority of lenders will only approve a title loan application from a borrower who has a fully insured vehicle. There are a number of other requirements that may need to be submitted before a lender approves a title loan:
* Driver's license
* Proof of place of residency
* Government issued identification card
* A minimum of three referees
* Checking bank account details
Certain lenders may also require a borrower to hand over a duplicate of his or her vehicle's key. A borrower's age must also be 18 years or more to receive the title loan. One major difference between title loans and other types of loans is that a lender does not perform a background check of a borrower's credit history before approving a loan. As such, title loans are popular among people with bad or limited credit history. When these loans are repaid in full, they can effectively build or restore a bad credit score; otherwise, it can cause further detriment in a person's financial stability.
How a title loan works
Once a borrower has submitted all the loan requirements, a lender will appraise the car to determine how much title loan the borrower is eligible to. Most times, a borrower receives just about half of his or her vehicle's resale value, although some lenders may offer more than this. A title loan approval process usually takes a short time, with small loans being endorsed in as little as fifteen minutes. Larger loans, however, may take 24-48 hours. Once a loan is approved, a borrower has immediate access to the funds. Even though a borrower is required to surrender the car's title once the loan is approved, the lender does not require the car itself to be surrendered. This is because the title adequately represents the actual asset.
Defaults in loan repayment
If a borrower fails to abide by the loans repayment schedule, the lender is entitled to repossess the borrower's car and put it up for sale in order to compensate the loan balance. To avoid this, borrowers should ensure that they can comfortably pay back the loan before acquiring it.
