Unexpected financial emergencies can arise at any time. With roughly one-third of American adults having no emergency money saved up, you might find yourself unable to cover the costs of a financial emergency.
Applying for a title loan can be a great way to leverage your car's value in order to quickly access the funds you need. Be prepared for a title loan before you fill out the application by verifying the following three pieces of information.
1. Existing Liens on Your Vehicle
In order to qualify for a title loan, you must own your vehicle outright. This means that there cannot be any existing liens on the vehicle. If you financed your car loan through a bank, credit union, or dealership and haven't paid the full balance of the loan, the lender will have a lien on your car.
You can ask a representative from your Department of Motor Vehicles to run a title search to help you identify any lien holders with a claim to your vehicle. Clear these liens prior to applying for a title loan so that your application is not denied.
2. Value of Your Vehicle
Another valuable piece of information you will need prior to applying for a title loan is the market value of your vehicle. A title loan lender will not be willing to loan you more than your vehicle is worth.
Your car will serve as collateral for the loan, so it's essential to ensure that the value of your car is high enough to garner the funds you need. Most title loan companies will only offer access to a percentage of a vehicle's market value, so request specific loan amounts from the company you are pairing with prior to submitting an application.
3. Repayment Period
Title loans are extremely convenient for borrowers who need immediate access to funds. The cost of this convenience is a higher interest rate than you would pay on another loan product. In order to prevent the amount of interest you pay from becoming too great, most title loan companies offer short repayment periods.
Evaluate your estimated income in the immediate future to ensure that you will be able to repay your title loan within the time frame specified. This will help you avoid unnecessary late fees or interest rate increases that could be associated with rolling the balance of your title loan over each month.