A car title loan is similar to a payday loan in that they are easier to get than a conventional loan, however, there are some differences. To qualify for a title loan you will need to have some type of qualifying vehicle to use as collateral. The title loan lender will keep your title as security just like the original lender did when you purchased the vehicle. Once your loan is paid off the title is returned to you showing the note has be satisfied.
The exact amount will vary depending on the state that you live in. For instance, in Arizona and California you can borrow between $2,500 and $50,000. In some states, you can borrow as little as $1,000. In all states your vehicle will have to have sufficient equity to qualify for the loan and you can get a good idea of how much that will be by checking the value via Kelley Blue Book
A title loan does require some of the same items as any other loan but the qualifications are far easier to satisfy. For you will need a qualifying vehicle with enough equity. This can be a car, truck, van, SUV, motorcycle, motor home, RV, commercial vehicle or semi tractor. Usually these need to be paid off but in some instances you can use a vehicle that has an existing loan with a small balance.
In addition to a qualifying vehicle, you will need a photo identification (driver's license), insurance on the vehicle, documentation of where you live (utility bill) and proof that you earn enough to make the payments on the loan. Many times this can be from social security payments or other such income sources.
In most cases, title loan lenders report the loan to the credit bureaus and many times this is required to comply with individual state guidelines. This means that making your payments on time (never making a payment that is over 30 days late) can help improve your credit scores. In almost all cases, paying off the title loan will have a great positive impact on your credit.
The typical repayment term on title loans is 36 months. In some cases you can get a loan with terms of 42, 48 or even 60 months. Title loans typically do not have a prepayment penalty which means that you can repay the loan off in full at any time and save a ton on interest. It all cases it is recommended that you pay off the loan as early as possible. The interest rate on title loans is usually higher than a conventional loan and repaying it early will can be a good way to get the money you need fast and not pay a tremendous amount in interest payments.