What Do You Need for a Title Loan?
Understand the essential requirements and the process for obtaining a title loan. Get clear on what you need.
A title loan offers short-term financing by using your vehicle as collateral. Unlike traditional loans, approval relies on your vehicle’s value rather than solely on your credit history. Understanding the requirements for your vehicle and personal finances is important.
Vehicle Requirements
Your vehicle must have a clear, lien-free title in your name. A clear title means the vehicle is fully paid off, with no outstanding loans or claims. If the title is not in your name or has a lien, these issues must be resolved before applying.
Lenders assess the vehicle’s value, which influences the loan amount. This valuation considers factors such as the vehicle’s make, model, year, mileage, and overall physical and mechanical condition. Industry guides like Kelley Blue Book or NADA Guides are often consulted. A physical inspection is often required to verify its condition, though some online lenders accept detailed photographs. Many lenders also require proof of current vehicle registration and may ask for comprehensive or collision insurance to protect the collateral.
Personal and Financial Requirements
Beyond the vehicle, personal and financial documentation is necessary. You need a valid, government-issued photo identification, such as a driver’s license or state ID, to confirm your identity and age (typically 18 or older). The name on your identification should match the name on the vehicle’s title.
Proof of residency is also required, often a utility bill, lease agreement, or bank statement. Lenders require evidence of a regular income source to ensure repayment ability, even without traditional employment. Acceptable income verification includes:
Recent pay stubs
Bank statements showing consistent deposits
Social Security benefits
Disability payments
Pension income
Alimony or child support
Some lenders may also request bank account information for direct deposit and automatic payments.
The Application Process
Once documents are prepared, the application process can begin. This involves locating a title loan lender online or at a local storefront. The application form requires inputting information from your documents.
After submission, the lender arranges a vehicle inspection and appraisal to confirm its value, either in person or via submitted photos. If approved, review the loan terms, including interest rate, fees (like processing or origination charges), and the repayment schedule. Title loans often carry high annual percentage rates (APR), sometimes 200% to 300%. Upon signing the contract, funds are typically disbursed rapidly, often within one business day via direct deposit, check, or cash pick-up.