An auto title loan can be just the thing when you need to get your hands on some quick cash. The application process is easy, approvals happen quickly and repayment can be easy. Moreover, it’s possible to get car title loans completely online, especially if you own your car outright.
But, can you get a title loan without clear title?
What is a Title Loan?
A car title loan is basically a form of borrowing in which you put up the title to your car to guarantee the lender you’ll repay the loan. Moreover, title loans work with just about any type of vehicle—cars, trucks, motorcycles and even RVs. One of the most favorable aspects of this type of loan is it can also be had even if your credit score isn’t exactly pristine.
Because you’re pledging a tangible item in exchange for the loan, some title lenders don’t even bother with the traditional credit check. Meanwhile, banks and credit unions will insist upon performing a credit check for any type of loan, including a personal loan. This can be problematic for people who are concerned about their credit scores, as having their credit checked actually lowers their credit score.
Applying for a Title Loan
When applying for car title loans completely online it’s a good idea to gather all the needed documentation beforehand so you can conduct the process quickly. Taking pictures of the car from all four angles is a good start. This will allow the lender to assess the condition of the vehicle to determine its current market value. You’ll also need pictures of the interior of the car for the same purpose.
A government-issued form of ID will be needed to prove your identity. The lender will also request documentationto confirm the address you provide is the one at which you live. A utility bill will typically meet that need. You’ll also be asked to supply proof of your income so the lender can determine your ability to repay the loan.
The other documentation you’ll need is, of course, the title documentation for the car, ideally showing you as the owner. If the title is heldwith another individual, that person will need to apply and supply and all the associated documentation too.
What if You Don’t Have Clear Title?
Lender policies vary on this, as does state law. Some lenders and states will allow the issuance of a title loan to someone who still owes money on the vehicle. In that instance, the loan amount will be based upon how much equity the borrower has.
Equity is the difference between the outstanding balance of the loan against the vehicle and its current market value. If the car is worth more than is owed, the owner has equity in the car. If they owe more than the car is worth, they have no equity and getting a title loan will sometimes not be possible.
So yes, there are instances in which you can get a car title loan without holding clear title on the vehicle. Again, though, the rules on this will vary from lender to lender and state to state. You can check with the lenders you’re considering to find out if their policies will permit such a loan. Similarly, running an internet search for car title loans in your state will help you determine if you can get such a loan where you live.