When you need a loan and you don’t have time to sort through all your old financial documents or go through a lengthy application process, a title loan is a good alternative to the standard bank or credit union loan. One of the things people appreciate so much is the limited number of documents you need for a title loan.
If you want to apply for a title loan and you want to know what you’ll need to bring with you, we’ve got you covered, whether you’re going to fill out a Texas title loan app or you’re applying in another state.
Documents You Need for a Title Loan
The first thing to understand about title loans is that there are two sets of laws that pertain to them – federal and state. Every title loan company must follow federal title loan regulations and the title loan regulations in their particular state, which means some states will have different documentation requirements than others to obtain a title loan. We’ll start with the documents you need for a title loan no matter which state you’re in.
One Form of Government-Issued ID
No matter what title loan company you visit, they’ll likely ask you to present a form of government-issued ID so they can see your date of birth. That’s because the federal government set the minimum age to obtain a title loan at 18. If you’re younger than that, you can’t get a title loan.
Most people use either their driver’s license or their state-issued ID card here, although you could also show the title loan company your passport or even your birth certificate. The title loan company will only need to see this briefly, and then they’ll return it to you right away.
Your Car Title
It is called a title loan, and it makes sense that you’d need to bring along your car title to obtain the loan. There are two basic requirements for your car title with your typical title loan company:
• It must be in your name.
• It must be lien-free.
These requirements ensure that you own the car completely. Since the car is the collateral on the loan, the title loan company will want to know that it can repossess and sell your car in the event of a default on the loan.
There are some title loan companies that don’t require the car title to be lien-free and instead allow you to take out a loan based on the equity you’ve built up in the car. This means you can get a title loan even while you finance the car. These are known as auto equity loans, although they fall under the same category as title loans.
As an extra assurance that you’ll pay back what you borrow, the title loan company will keep your car title over your loan’s repayment period. Once you’ve finished paying off your loan, you’ll get your car title back.
Now, this next item isn’t technically a document, but it’s something you need to bring with you when you get a title loan, all the same.
The title loan company can’t just take your word about what kind of condition your car is in. That helps them determine how much they can lend you, which means they need to see your loan in person to evaluate its condition and figure out its current market value.
Title loan companies use this process to set the maximum amount they’ll lend you:
1. Enter your car’s information, including year, make, model and mileage, into a vehicle value guide.
2. Take a brief look at your car to see what condition it falls under, such as fair, good or excellent.
3. Compare the condition chosen to the values listed in the guide to pinpoint what your car is worth.
4. Set the maximum loan amount as a percentage of your car’s value, with about 25 to 50 percent being usual amounts.
Now, some states set maximum title loan amounts that title loan companies will also need to follow, regardless of how much your car is worth.
Although title loan companies in every state will need to check out your car, in some states, it’s even a legal requirement, because a title loan company can’t lend more than a certain percentage of the car’s value by law.
There’s one document that may be required in certain states or by certain title loan companies.
Proof of Income
If you’re looking for no proof of income title loans, you’re in luck, because most title loan companies don’t require proof of income for a title loan. This is the case in Texas, where title loan companies don’t need to check your income.
There are a few states where state law requires title loan companies to check every potential borrower’s income first. The title loan companies in these states can’t issue loans with monthly payments larger than a set percentage of the borrower’s monthly income.
If you’re in one of these states, then you’ll need to bring some type of income verification in to show the title loan company how much you make. Paystubs are the easiest way to do this, but if you own a business or you’re a freelancer, you could bring in bank records or other documentation.
What You Don’t Need to Get a Title Loan
One of the most shocking facts about title loans for people who are used to bank loans is how little you need to get one. The documentation listed above is all you’ll need, which means you don’t need to collect your financial records for the past several years.
You won’t need to bring in your tax returns, either. And if you’re wondering about a credit check, the title loan company won’t ask you to authorize one, because they don’t need to check your credit to issue your loan.
Whether the title loan company approves you for the loan all depends on you having a car with sufficient value left. If you do, you’ll be approved, and the amount you can borrow will depend entirely on how much your car is worth and any particular limits your state has in place.
If you have poor credit, you don’t need to worry about it here. This makes title loans one of the best options on the market when it comes to bad credit loans.
Getting Your Title Loan
Now that you know what you need to get a title loan, you may want to know how long it will take to get your money.
That’s another title loan benefit. The entire application process goes by quickly, and many borrowers end up getting in and out of the title loan company’s office in just an hour. You’ll just fill out some paperwork, let the title loan company check out your car and give them the title. They’ll give you the money and you’re good to go.