Title Loan Application Process
The title loan application process is designed to check the borrower's eligibility and the value of the vehicle used as collateral. Different lender has different steps; however, the steps to apply for the loan are easier compared to the bank.
Here are the steps you need to follow to apply for the title loan.
Step 1: Fill Out the Application
Like the usual application method, you will need to fill out an application form. In the form, you should write down personal information (name, contact, and address), and the vehicle's details (year, make, model).
Step 2: Submit the Documents
The vehicle title is required and must show that there are no existing liens. Proof of identity, residence, and income is also needed so the lender can assess financial stability. You will need to submit these documents along with the application form.
Step 3: Vehicle Value Inspection
The appraisal considers factors like the car's condition, mileage, and demand. This step helps the lender decide how much money can be loaned, and it will depend on the vehicle's market value.
Step 4: Loan Assessment
Once the appraisal and documents are complete, the lender evaluates the application. While some lenders check credit scores, many focus mostly on the vehicle's value and the borrower's ability to repay the loan.
Step 5: Loan Offer and Agreement
If approved, the lender will offer the loan and show the amount, interest rate, and repayment terms. Borrowers should review all terms carefully. Once accepted, a lien is placed on the vehicle title until the loan is fully repaid.
Step 6: Funding
After signing the agreement, the funds will be given or transferred to the borrower. Borrowers may receive money via direct deposit, check, or cash, depending on the lender.
Example of a Title Loan Calculation
If you take out a 30-day car title loan for $1,000 and the lender charges a 25% fee, here's how it works:
Loan Amount: $1,000
Fee: 25%, $1000 x 0.25 = $250
Total Repayment: $1,000 (loan) + $250 (fee) = $1,250
In this case, you would need to repay $1,250 by the due date, probably around 30 days.
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