Most people are aware that they can visit their bank or another financial institution and attempt to take out a loan. What many may not be aware of is that they can also use their car, truck, or SUV to take out a loan. The car title loan is becoming more popular these days as banks and credit unions tighten their requirements for borrowing. As title loans become more popular, people want to know more about them. Here are the top five questions about car title loans.
- What exactly is a car title loan?
A car title loan is a short-term loan that is secured by a vehicle. The vehicle can be a car, truck, SUV, or van. To take out this type of loan, a borrower must possess the title to the vehicle.
- How do I qualify?
In order to qualify for a car title loan, you will have to speak with a lender directly. In most cases, you will need to be 18 years of age or older, own a vehicle, have a valid driver’s license, and have insurance coverage for the vehicle. These qualifications may vary slightly according to the lender. For the most part, if you own a vehicle that is fully paid for and has no other liens, you will qualify.
- What are the vehicle requirements?
Most lenders prefer that your vehicle is 10 years old or newer. Again, that can vary by lender. Lenders such as Embassy Loans of Florida would also prefer that the vehicle is paid off entirely. In some cases, borrowers can still have a loan balance and take out an auto title loan. The vehicle must be in working condition and not have any serious damage.
- How much can I borrow?
The amount that you can borrow is entirely dependent upon how much the vehicle is worth. Title loan companies normally use blue book values for vehicles. It is important to understand that lenders will only allow you to borrow roughly 30 to 50 percent of the vehicle’s value. If a car is worth $10,000, you can only borrow $3,000 to $5,000.
- How long does it take?
A car title loan does not take as long to process as a typical loan from a bank. At Embassy Loans, for example, the average loan is completed within an hour. Borrowers can have their hands on their money within two days. The reason for the quick processing is the lack of paperwork associated with car title loans. Traditional loans from a bank take longer because of things like credit history checks, background checks, employment verification, and more.