What You Need to Provide When Applying for a Car Title Loan

Debts are like children: the smaller they are, the more noise they make.”

-Spanish Proverb

Taking out a short-term loan or getting into debt (apart from a mortgage) is never a good thing; however, the fact of the matter is that sometimes there is no alternative. Furthermore, it can easily be argued that we spend more than we earn; ergo, we need to downsize our lifestyles to reduce our expenses.

What happens should have an unexpected crisis and you have no extra cash to solve it? Financial and budgeting experts consistently repeat the mantra that we all need to keep a savings pocket; however, the harsh reality is that we never end up taking the time to set aside the necessary funds. There is also something more important to spend the money on.

What is a car title loan?

Now that we have established that it is sometimes necessary to take out a short-term loan when there is a crisis, let’s have a look at what a car title loan is:

Investopedia.com provides the following concise definition: “A car title loan is a short-term loan in which the borrower’s car is used as collateral against the debt.”

Furthermore, the salient points to note about this type of loan are as follows:

  • You do not need a good credit score to apply for a car title loan.

  • The only collateral that you provide is your car’s title deed.

  • Therefore, the car has to be paid off in its entirety before car title loans Sacramento will accept the vehicle’s title as collateral for the loan.

  • The loan amount will only ever be 25% – 50% of your car’s value.

  • Because, it’s a short-term, high-risk loan, the interest rate can be as high as 300% of the value of the loan.

  • The advantages of this particular car title loan is that it can be repaid over a period of 36 months.

  • Finally, should you not be able to repay the loan, the lender is entitled to take your vehicle in lieu of the loan amount.

Documents and such that you need to provide when applying for a car title loan

Apart from handing your car’s title deed over to the lending institution, you also need to attach the following documents (and sundries) to your loan application:

  • Obviously, you need to attach the original vehicle title deed proving that you own the vehicle outright.

  • A government-issued identification document which will prove that you are indeed the car’s owner.

  • Proof of the vehicle’s insurance policy and registration papers. In other words, the vehicle has to be both registered and insured.

  • Your proof of residence or a utility bill. It’s important that this proof of residence matches the name on the motor vehicle’s title.

  • A working set of car keys.

  • A payslip or proof that you can repay the loan.

  • Contact details of two valid references.

Final words

Before you take out a car title loan, it is important to make sure that you can repay the loan within the negotiated period; otherwise, you run the risk of losing your vehicle. To be honest, I am not sure that losing your vehicle is such a good idea.

Say Something