While not as frequently used as traditional lending options through banks or credit unions, the auto title loan has gained in popularity over the past few years. One reason for this is that borrowers often find that the application and approval process is more convenient and takes far less time than the process of applying for a loan through a bank or credit union typically does. Like all types of credit, however it is important for those who are considering making application for the first time to do their homework and learn as much as they can about the process, as well as the potential benefits and drawbacks.
If you have recently become interested in auto title loans and are considering applying for one soon, the following information will help give you the information you need to enjoy the best possible experience with this type of lending instrument.
Auto title loans are designed to be a short-term lending option
Auto title loans were not designed to be a long-term lending option. Unlike traditional auto loans that are usually designed to be repaid over a period of one to six years, the average repayment term for an auto title loan is usually based on just thirty days for single-repayment loans or a few months for installment auto title loan options.
Loan amounts are typically less than the car's actual value
As part of the application process, auto title lenders must use an appraisal process to determine the fair market value of the vehicle. Applicants, however, should understand that any loan offer that will be made will likely be half or less of the appraised fair market value amount.
Applicants must provide documentation
While individual title loan companies can vary in their terms for application and processing, most require applicants to provide similar documents. These typically include:
- Clear title to prove ownership
- Valid photo identification
- Documentation to prove the applicant's address
- Insurance documents showing the vehicle is actively insured
The vehicle must also be in operating condition and be taken to the location of the auto title lender where it will be inspected and photographed by a representative of the auto title lender.
Prospective auto title borrowers may also be required to allow the auto title lender to install an electronic tracking device on the vehicle for the duration of the loan.
To learn more about the auto title loan process or to apply, interested prospective borrowers should contact a reputable title loan lending establishment in the city or town in which they live.Share