A title loan is a short-term loan in which a vehicle owner wants to get some money out of their car, without giving up on their vehicle, and uses it as collateral against the debt. In other words, the car becomes a source of funding that saves you from going through the lengthy bank processes of getting a loan or having to ask family or friends for money. In return for hundreds or even thousands of dollars, you give the lender the title to your vehicle, be it a car, motorcycle, truck or RV for a specified time. During that time, you, the borrower, need to repay the debt of the car title loan to get your vehicle back. Not all states allow title loans but they are perfectly acceptable in Nevada.
What Are the Requirements To Get a Title Loan?
In most cases, you must own the vehicle outright to get an auto title loan. If you have any liens against the car’s title, you won’t qualify for a car title loan. That being said, you do not need good credit to get a loan because the loan depends on the resale value of your car. In fact, barely any lender checks your credit. Likewise, it is not necessary to be employed to qualify for a car title loan.
In addition, certain paperwork is required, including the following (or any of them):
- A Clear title in your name – The lender may need the original title of the car showing sole ownership. The title should be in your name only. Also lien-free and clear of any other encumbrances.
- A Government–issued ID – You must be 18+ years of age. The identification should also match the name of the title. This can be your driver’s license and Social Security number. If you are not licensed to drive (but own the vehicle), the lender may accept a passport, military identification or valid state-issued ID card.
- Proof of Residency – Since, car title loans are not available in all states, it is essential to provide evidence that you live in a locality that allows them. Proof of residency can be a utility or phone bill, a statement from your landlord, or your house lease or deed. Even a bank statement with your home address (as long as the bank statement is in your name). Again, this should match the name on the title. Finally, you may also use residency documents to verify your identity too.
- Proof of Ability to Repay the Loan – Title loan companies need to know for sure that you can afford the monthly payments, even though you are providing collateral for the loan. This is mainly because they do not want to be responsible for putting someone who may already be dealing with financial problems in a tight spot. To prove that, you may be required to provide 1-4 weeks of paystubs from wage earners. If you are self-employed, you could provide 1-3 years of tax records, bank statements, and business financial documents. Retired borrowers can provide retirement account or pension statements while unemployed people could provide statements from the Social Security Administration (if you rely on Social Security).
- Vehicle Documents – This may include current vehicle registration and proof of vehicle insurance, so auto title loan companies are protected if the car is stolen or damaged. If the car has recently been released from a previous lien, the lender may ask you to hand in the lien release paperwork from the previous holder of the lien.
- References – More and more auto title loan lenders ask for, at least, two valid references (with your references’ names, addresses, and phone numbers also provided, along with your relationship to them). Although this is usually required so the lender can get an idea of your ability to repay the loan and your character, your references are rarely being contacted unless your default and the lender cannot reach you by phone, email or other provided means of communication.
- Working copies of your car’s keys.
- Some lenders also need the vehicle to be equipped with a GPS tracking device so that they can repossess the car should the owner defaults. Depending on the type of GPS tracking device attached to the vehicle, the lender may be able to disable the vehicle
- Your bank statement may as well double as your proof of residency and proof of income if you receive your paycheck via direct deposit.
Apart from the paperwork mentioned above, the lender will also need to do a quick inspection of your vehicle (not a lengthy procedure, though) to determine whether it qualifies for a car title loan. They will check the mileage and ensure that it runs properly, which will help them put a price tag on the vehicle and figure out the maximum loan amount they can give you.
What To Do If You Lost Your Vehicle’s Title
If you lost the title to your vehicle, no worries, you can obtain another one. Here’s what to do if the vehicle title is in your name and what to do if it’s not.
If the title is in your name
If you lose the title to your vehicle, you need a replacement Certificate of Title for that vehicle (as long as the vehicle is already titled to you). This is not a complicated case. All you need to do is just apply for a replacement title from your state’s DMV or the Secretary of State, either online, in person or by mail. Don’t forget to bring along your VIN (Vehicle Identification Number) or your Certificate of title number (both details are on your registration), plus your driver’s license number or FID (Federal Identification) number if the owner of the vehicle is a business and not an individual. Then, you pay some fees (usually around $25) and wait up to 10 business days for the replacement title to arrive in the mail.
Things to Consider:
- If you got a loan for your car, which has been paid off, you need to check with the bank or other lienholder to see if they have the title to your vehicle. If not, have them sign a letter which has that the loan has been fully repaid and include the VIN, make, and year of the vehicle, along with the title owners.
- Submit the lien release with your application for a replacement certificate of title (no photocopies or faxes of it are accepted).
If the title is not yet in your name
If you got the title from the seller and lost it before you had the chance to transfer it into your name, things get a bit core complicated. You should visit your state’s website to find out the exact processed required. However, there are not many differences with the procedures mentioned below among states – give or take some bureaucracy.
So, if you are left with a car and no title, you have no official record stating that you are indeed the true owner of the vehicle. The first solution is to find a seller and have them order a replacement title. When they get their hands on the replacement title, they only need to sign it over. But, if the seller does not cooperate, don’t give up hope just yet. There are other things you can do to title the car in your name:
- Get a court order – You need a court order (any court order) that will award you the title to the vehicle, provided it includes the VIN, make, and year of the vehicle you want titled. If you are okay with going to court and litigating the issue, this is a good option to consider.
- Post a surety bond – You can get a surety bond from a bonding or an insurance company for 2X the fair market of your vehicle. That is if your vehicle is a late model car. From the moment your state issues you a certificate of title (know that you will have to keep the bond for 3 years), you should be prepared to defend your title. If someone else comes forward and claim that your vehicle is theirs, you may use the surety bond to support your claim that you indeed own the vehicle.
- Self-certify that the vehicle belongs to you – Some states, like Michigan, call this the Last Resort. For a vehicle older than 10 years that is worth less than $2,500, you fill out a form, where you provide details about how you got the vehicle and then confirm its low value (you may have the vehicle appraised by a licensed dealer and show that as proof of value). For this case to work, you need to be a resident of the state the vehicle was previously titled in. Alternatively, you may visit an online valuation service and try to dig up any value which shows that your vehicle’s value is below $2,500 (could be retail value, trade-in value, wholesale value). Print it out and you are done.
Before you go on and apply any of the methods mentioned above, first check your state’s Secretary of State (see links below) or DMV website and find the one that works best for you.
Links to the Secretary of State Offices For Each State
Some Final Thoughts
Although the requirements may seem overwhelming, don’t let them deter you from applying for a car title loan if you really need some extra cash. There are multiple programs that allow lenders to offer a loan in almost every circumstance. Having said that, the best candidate for a car title loan is a person with a reasonable expectation of having the loan paid off entirely before the expiration of the repayment period, and own the vehicle outright. With a realistic and clear plan for paying off the loan, an auto title loan comprises a superb option to support your income with some extra cash when you are facing temporary low cash flow.