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This content is for informational purposes and is not intended to provide financial advice.
If you need cash but you’re ineligible for a bank loan and don’t want the interest rates that come with payday loans, a secured loan could be your answer. In fact, if you own a vehicle and have regular income, you likely qualify for a title loan. Can you use your car as collateral for a loan? Yes. Here’s what you should know.
What is a Title Loan?
This is a short-term loan that usually is due in 30 days or less, although longer terms are sometimes available. To get one, you’ll need a vehicle registered in your name that you own outright.
The loan is secured by the vehicle’s title, which means approval rates are high. However, it also means that if you don’t make timely payments, your vehicle could be seized and sold to cover the default. So, you should know for certain you can repay the loan before taking one out.
A key feature of title loans is, unlike most pawn loans, you can keep your vehicle – car, truck, RV, or motorcycle – while you’re making payments. The lender will only have your title, which will be returned once the loan is repaid.
What are Common Uses for Such Loans?
They can be used for anything, but common reasons for taking one out include unexpected medical bills, renewing registration tags, repairing another vehicle, buying school supplies, paying a large bill, or fixing a major appliance.
What is Required for Title Loans?
In addition to a vehicle and clear title, you will need to show you have the means to repay the loan. Pay stubs or bank statements will do the trick. You also must have a driver’s license or other government-issued photo identification, and proof of residence (utility bill, lease agreement, etc.). Some lenders require other documents such as personal or professional references and proof of vehicle insurance.
In addition, the lender will want to see recent, quality photos of your vehicle from all angles, and clear shots of the vehicle ID number and odometer.
How Much Can I Get?
That depends on the title lender, but loans usually are for between $100 and $10,000, although amounts can go even higher.
In deciding how much to offer you, the title company will consider the make, model, age, mileage, and overall condition of your vehicle. They may also factor in trim level, style, and any modifications or alterations.
What are the Benefits of Online Title Loans?
Every lender is different and specifics regarding such loans can depend on the state in which the loan company is located. With that said, here are some general benefits of vehicle title loans.
- Applying is convenient. You can apply totally online from the comfort of your home or wherever.
- Quick cash. Funds are usually available within 24 hours of approval, which could come within minutes of applying. Plus, many lenders can deposit cash directly into your bank account or onto a debit card.
- Minimal processing. You likely already have at your fingertips all the materials you need to apply for a loan. Ownership of a vehicle and the ability to repay the loan are the essentials.
- Good credit is not required. Lenders will have the title to your vehicle, and that is enough for most. They might pull your credit but won’t base lending decisions on it.
- You can keep driving. After you take out the loan, you are free to use your car as you normally would while you’re making payments.
So, yes, you can use your car as collateral for a loan. If you do opt to go that route, just be certain about repayment. If you’re good to go on that, a title loan may be just what you need to help you out of a jam.
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