You’re short of cash and now a situation has arisen, and you need a loan – ASAP. The problem is that your substandard credit score makes you ineligible for a traditional bank loan. You have heard of lenders who will allow you to borrow against your car title, and now you’re wondering, can you get a title loan with bad credit? The answer is yes, but here’s what else you should know.
What is a Title Loan?
These are short-term loans of 30 days or less, although you may be able to find one with terms of around a year.
You’ll need a vehicle in your name and a lien-free title, which the lender will keep until the loan is repaid. You’ll still be allowed to use your vehicle as normal while you’re making payments, which is a major benefit. Because the loan is secured, though, you could lose your vehicle to seizure if you fail to make timely payments. The lender would use proceeds to cover its losses.
Also, “vehicle” can mean your car or truck, but also your boat, recreational vehicle, or motorcycle.
How Much Can I Borrow?
This depends on state law, your income and ability to pay, and the make, model, overall condition, mileage, and age of your vehicle.
Most loans are for between 25 per cent and half your vehicle’s value, which usually works out to between $100 and $10,000.
The amount you can borrow will not, however, turn on your credit report. If you have less-than-good credit, you likely won’t stand a chance with traditional lenders. However, people with all manner of credit histories are approved for title loans every day. Since your vehicle serves as loan collateral, lenders aren’t too concerned about your FICO. So, a title loan with bad credit is indeed imminently possible.
What Do I Need for a Loan?
In the main, you’ll need that vehicle in your name and a clear title. You’ll also have to possess a government-issued photo ID and show proof of income – bank statements, pay stubs, etc. — and loan repayment ability. If you don’t have a job but you do have another source of regular income, say from retirement funds, Social Security, self-employment, pension, etc., you should be good to go.
Some lenders have various other requirements, including professional or personal references, proof of residence, and proof of insurance.
You’ll also need to supply a set of quality photos of the vehicle, taken in natural daylight. Take shots from all angles, plus the interior, making sure to capture your VIN and odometer mileage reading. The good news is that you need not take your vehicle in for an in-person appraisal.
How Long Does the Process Take?
It doesn’t take long at all. In fact, an industry selling point is that you can apply for a title loan online and get approved that day, sometimes within minutes. Following approval, you can usually have funds in hand by the very next day.
Depending on the loan company, you’ll likely have several options for getting the cash, including picking it up at a brick-and-mortar location, having an overnight check sent, or getting a payout from a local MoneyGram location. Many lenders also offer direct deposit, so you might want to make certain your account can handle ACH transfers before you apply.
So, in summary, yes, you can get a title loan with bad credit, or no credit, for that matter. All you basically need is a car in your name, a lien-free title, and the ability to repay your loan.