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Can I Get A Car Loan Using My Car As Collateral?
By MArcela De Vivo • Apr 19, 2023
Many people who need fast cash have trouble getting approved for a traditional personal loan. If you’re in this situation, you may feel as if you’re out of options, but that’s not the case. There are other options available, including secured loans, which are loans that are supported by collateral.
Collateral is an asset that a lender can use to secure a loan. Lenders may accept many different types of assets as collateral. Since your vehicle is probably one of the most valuable assets you own, you may be wondering, “Can I get a car loan using my car as collateral?” Yes. In fact, this is how many borrowers get the cash they need to make ends meet. Here’s what you need to know about car title loans:
How Do Car Title Loans Work?
A car title loan, which is also known as a title loan, is a secured loan supported by the title to the borrower’s vehicle. In other words, you must use the title to your vehicle as collateral to take out a title loan. Lenders allow borrowers to use the titles to cars, trucks, or SUVs as collateral for title loans. Some lenders also accept the titles to RVs or motorcycles as collateral.
What Happens to My Car When I Take Out A Title Loan?
Some people think that they will need to give up their vehicle in order to borrow money with a title loan, but that’s not how it works. Your vehicle is used as collateral, but that doesn’t mean you need to give your vehicle to the lender. Instead, your lender will put a lien on the title to your vehicle. You can continue to drive your vehicle as you normally would while you repay your loan. Once the loan has been paid in full, the lender will remove the lien from your title.
Nothing will happen to your car as long as you comply with the terms of the agreement, which means making on-time, consistent payments. If you fail to make payments, your lender has the right to take possession of your vehicle to satisfy your debt.
Am I Eligible for A Title Loan?
You may be eligible for a title loan if you meet these conditions:
● You are at least 18 years old.
● You own or partially own a vehicle, which means your name is on the title.
● Your vehicle does not have a salvage title.
● You will consent to a credit check.
● You have auto insurance covering the vehicle you want to use as collateral.
● You have a steady source of income.
● You have equity in your vehicle.
If you meet these conditions, you may want to consider applying for a title loan. During the application process, be prepared to submit certain documents to your lender, including:
● Your driver’s license or another type of ID
● The title to your vehicle
● Pay stubs, tax documents, bank statements, or another accepted form of proof of income
● Proof of insurance
You will also need to give the lender permission to inspect your vehicle so they can calculate its value.
How Much Can I Get with a Title Loan for My Car?
Title lenders can typically lend up to $50,000 per title loan. However, the amount you can borrow will vary depending on several factors, including:
● Where you live
● Your income
● How much your vehicle is worth
● Your equity
Some states have laws that establish minimum and maximum amounts for title loans. If you live in one of these states, these laws could impact how much you are able to borrow.
Your income will also play a role in calculating how much you can borrow. Your lender will likely need to see proof of income to determine how much you are capable of repaying.
Because your vehicle is used as collateral, it’s value plays a major role in determining how much you can borrow. Your lender calculates the resale value of your vehicle by evaluating its make, model, year, mileage, condition, and trim level. If you aren’t sure how much your vehicle is worth, contact your lender to find out. It only takes a few minutes to get a quote.
After determining your car’s resale value, your lender will need to calculate your equity in the vehicle. The term “equity” refers to the value of your share of ownership in the vehicle. To calculate your equity, subtract the amount you owe on your vehicle from your vehicle’s resale value.
You cannot borrow more than the value of your vehicle and you must have equity in the vehicle. If you don’t have equity in your vehicle, you cannot use your car as collateral.
Does A Car Title Loan Affect Your Credit?
Most title lenders report to the three major credit bureaus, which are TransUnion, Equifax, and Experian. This means taking out a title loan will impact your credit.
Your lender may report your new loan to the credit bureaus, so your title loan will show up on your credit report. Taking out a new loan, regardless of the type of loan, can negatively impact your credit score. This is because you are taking on more debt, which affects your creditworthiness.
Your lender will also report your payment information, specifically whether your payments were on-time. Payment history is an important factor in calculating your credit score. It accounts for about 35% of your overall credit score. If you make consistent, on-time payments on your title loan, this could improve your credit score over time. But the opposite is also true. Failing to make consistent, on-time payments on your title loan could hurt your credit score.
Taking out a title loan could also add to your credit mix, which refers to the diversity of your credit accounts. If taking out a title loan makes your credit mix more diverse, this could have a positive impact on your credit score.
What Are the Benefits of Car Title Loans?
Title loans offer borrowers a number of benefits, including:
● Fast processing times. You won’t have to wait weeks to find out if you are approved for a title loan. Title loans are usually processed much faster than other loans, so you can quickly get the cash you need.
● Easy to apply. Don’t expect to fill out dozens of pages of paperwork when applying for a title loan. The application process is simple and straightforward.
● Keep your car. You don’t need to hand over the keys to your vehicle in exchange for cash when you take out a title loan. You can keep driving your car while you make on-time payments on your loan.
● Alternative to a traditional personal loan. There are different eligibility requirements for title loans and traditional personal loans. This means you could still get approved for a title loan even if you have not been approved for a traditional personal loan.
How Can I Apply for A Car Title Loan?
It’s not hard to use your car as collateral to get a car title loan. If you’re ready to apply for fast cash, here’s how to apply for a title loan with 1(800)Car-Title®:
- Get in touch with a loan officer by calling 1-800-227-8485 today. You can also submit your information using the form on our website. If you choose this option, a loan officer will contact you as soon as possible.
- Get a free quote. First, provide your loan officer with some basic information, including your vehicle’s make, model, year, and mileage. After collecting this information, your loan officer will tell you if you may qualify and if so, how much you can borrow.
- Submit documentation. If you are happy with the terms of your qualification, you will need to work with your loan officer to finalize your loan. Your loan officer will explain what documents you need to sign and submit to complete this step.
- Secure your cash. If approved, your lender will allow you to collect your loan proceeds in cash shortly after being approved for a title loan and filling out all necessary paperwork. You can either pick up your loan proceeds in cash either in person or you may ask your lender to send it to you directly via check or wire transfer.
Begin your application today to get the cash you need as soon as possible.
MArcela De Vivo • Apr 19, 2023
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USA Patriot Act Disclosure: Important information about procedures for opening a new account
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you apply for a loan, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
Loans may be made by one of several lenders, including: Wilshire Commercial Capital L.L.C. dba 1 (800) Car-Title and Wilshire Consumer Credit, a licensed lender in certain states. Loans not available in all states. In California, loans are made pursuant to a Department of Business Oversight California Finance Lenders License. See State Disclosures for additional information.
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Wilshire Commercial Capital, LLC dba 1 (800) Car-Title and Wilshire Consumer Credit is located at 4727 Wilshire Blvd, Suite 100, Los Angeles, CA 90010.
TO REPORT A PROBLEM OR COMPLAINT WITH THIS LENDER, YOU MAY WRITE OR CALL Tracy Bergiman, Director of Compliance, 4751 Wilshire Blvd. Suite 100, Los Angeles, CA 90010, 323-837-5775, tbergiman@westlakefinancial.com.
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(505) 476-4885 or visit the website: https://www.rld.nm.gov/financial-institutions/.