All about the challenges of Midlife Finance

The Skinny on Vehicle Title Loan

     Need a loan…fast?

Depending on your circumstances, a vehicle title loan may be the way to go.

This type of loan is also called a “title pawn,” “U-Drive” or “pink slip.” (You’ll see why in a minute on the latter.) Technically, it’s a ‘motor vehicle equity line of credit:’ in other words, your car, truck or SUV is your collateral. Which means:

*It doesn’t matter if you’re self-employed, on a fixed income…or even unemployed.

*Your credit rating isn’t checked.

*Other financial commitments don’t play much into this, either. This is a loan that basically deals with one item: your vehicle.

vehicle title loan

What do I need to apply?

*Free-and-clear title to your vehicle. It should say “no liens,” or the lien holder line is blank. This is often on a pink slip of paper. (See why the loan has the name it does?)

*Photo ID – a driver’s license works best. (Some companies also ask for a SSN and proof of insurance.)

*Depending on which state you live in, you may also be asked for proof of income: paystubs, bank statements, income tax returns, items like that.

Some companies also ask for ‘proof of residence,’ using a utility or cellphone bill, mortgage or renter’s info. References may also be requested.

Ok, I’ve got that stuff. What’s next?

This is the easy part; you can almost always apply online. And the process is fast: you’ll know within a few minutes whether your loan’s been verified and/or approved. Then all you need do is bring your vehicle to the store, meet with the rep, finish the approval process (20 min. or less, generally)…and get your cash.

How much can I borrow?

It depends on your vehicle’s year, make and value, to begin. Then the company will help set a budget based on how much you can afford to repay, month by month. The amount could be as little as $100, or as much as $10,000. It all depends.

Can I repay my loan online, or make prepayments?

Generally yes to both. Make sure to read the fine print  before you sign the contract, to know exactly what’s required of you.

Do I have to give up my vehicle to get the loan?

No, you keep it. As long as you faithfully make the payments on the loan, your vehicle stays with you.

Can I get a loan based on any other equipment?

Some companies do lend on other things, including campers, trailers, boats and motorcycles. Ask when you apply.

Interest rates are set by the company…ask to make sure you understand. And if you don’t make payments, your vehicle is at stake. But if your credit rating is uneasy, you need money fast, and you have difficulty finding other ways to come up with it, this might be the way to go.

9 Responses to The Skinny on Vehicle Title Loan

  1. If someone is in such bad shape that they can’t get a traditional loan, I can only guess that the inevitable end result of this kind of arrangement would be the loss of the vehicle. It’s one thing to pay crazy-high interest rates, but it’s a completely different situation to lose a vehicle, especially when the circumstances dictate that the chances of obtaining a replacement are next to none.

  2. I agree with SB. If you feel a title loan is the best option for you, please make an appointment with a credit counselor at a nonprofit agency to review your financial situation. People who habitually get title loans are not on the road to financial success, I think. Take a different road!

  3. This is definitely one of those ‘do it only if you absolutely have to’ options. And there is the real possibility you might lose your vehicle, as well. (I think of it as ‘auto pawn,’ because in essence, that’s what it is. Interest on pawn loans isn’t the lowest, either.)

    But…if your credit is shaky, and you really REALLY need this money (emphasis on ‘need,’ not ‘want’), it’s one of the possibilities to consider. And certainly it would be a one-time thing to help you get out of debt — and not back in. (I feel the same way about payday loans.)

    Thanks for contributing, all of you.

  4. I agree with the other posters. This falls into the “if no other options are available” category. Could be a downward spiral if you can’t make payment, lose car, and then can’t get to work to make any money.

    What do the interest rates on a loan like this end up being? I haven’t really looked that far into it.

  5. If you really need it that bad then I feel for you. Go get it! But dont use this as the easy out and say I need money let me get a title loan. I heard they really make a lot of money from people who default and then they take the car and just sell it at auction.

Leave a reply