Car title loans are short term loans which take care of your immediate cash requirements. These loans factor in the equity you hold in your vehicle and the current market value of your car, so while obtaining a title loan on and older vehicle is more difficult, it’s far from impossible.
It is possible to get a car title loan for older cars as long as there is enough equity in the vehicle.
An approval for a title loan depends upon the lender. Lenders have the freedom to decide loan value, interest rate and repayment terms. Finding a car title loan for an older car may sometimes be difficult. However, this guide will provide you an idea of how to obtain a competitive car title loan for your older car.
The Process of Applying with A Lender
It might not be fairly easy to obtain a car title loan when your car has a few years under its hood; however, it is not impossible as well. All you need are few documents and a pinch of dedication. Make sure you shop around for the best rates while searching for a new car title loan.
A car title loan involves using your car as collateral to get a certain loan amount in exchange. Mileage reading is one of the first things a lender looks at, while deciding the loan approval amount. This is one of the reasons why people get skeptical, wondering whether their old car’s title will qualify or not.
Car title loans for older cars work the same way as new models if you have equity in the vehicle and a free and clear title.
On application, a lender will ascertain the current resale value of your car based on the ‘Kelly Blue Book’ or another unbiased car valuation service. The loan amount is based on this value.
loans are generally short term for 30 days. However, many lenders make it easy by offering an option to roll-over. You can roll-over the loan amount and any interest into a new loan for another period of 30 days.
Factors to Consider When Obtaining A Loan
People who need cash do not always have a brand new set of wheels. In fact, your car could be older than 10 years. Title loan companies are generally not interested in taking a bad loan. Title loans are covered by the car collateral.
Lenders find it easier to give loan when they know their money is safe. In case you default, your car should have enough value to recuperate the entire loan amount with interest and any other costs associated with car repossession and sale.
Car title loans are notoriously famous for not considering employment status and credit history during the approval process. However, if your car is a lower valued car which is older than 10 years, then you can improve your chances of getting a loan by keeping these parameters in mind.
The following factors can work in your favor and encourage a lender to give you loan, even with an older car:
1. Personal Income
Car title loans use your vehicle as collateral to cover any risks associated. However, the risks are automatically lowered when you earn enough to repay the loan amount in full. Your recent pay stubs should be enough proof of your income. Make sure you attach these with your loan application.
You can show additional income streams as well. A lender will feel more confident if you have multiple income streams like child support, investments, rental support or any other area of revenue.
2. Credit History
Credit scores and credit history are usually not factored in when you apply for a title loan. However, few lenders are more comfortable lending to a person with good credit score when the collateral is an old car.
Title loan lending companies try to lower their risk by a huge margin. It is easier for them to have a loan repaid rather than a car repossessed.
A good credit score establishes the fact that you are a good risk. However, do not let this hold you back from applying. Title loans technically do not require your credit details. In fact, people who have a foreclosure, or have filed for bankruptcy in the past, are also eligible for getting a title loan.
A lender wants to know that you are a good risk before offering a title loan. References can help you get that loan even if you do not have enough equity in your vehicle and if you drive a car like the one in the hilarious movie Trains, Planes, and Automobiles then you really don’t have to worry about getting any money for your car since your car is not worth anything.
Year on depreciation can cause a vehicle to lose its value, even if it is in prime condition. By having people ‘vouch’ for you through references, you prove to a lender, that you are trustworthy and a good risk.
You can provide professional references including work history and current job contact information as well. This exercise can ease the lender’s mind and allow him to look past the depreciated value of your old car.
4. Vehicle Type and age
You will have no problem obtaining a car title loan if your car is fully paid up, even if it is old. Your chances will get better if your car is of high value, like a classic car. Make, model, and mileage play a pivotal role in determining the loan amount and if you spend money like the job killing state of California or Nick Persons from the movie Are We Done Yet then you are going to need lots of loans.
A lender will feel more comfortable giving loan on a high-value BMW which is completely paid off. However, you need to make sure that you always make payments on time.
5. Clear Title
You need to have a clear title to your car. This means there should be no liens or loans taken out on it. The car title should be in your name and registered in the same state where you apply for the loan.
If there are two names on the title registration, then the application form shall require both signatures. However, this is not required if there is an ‘or’ between the two owner names.
The Bottom Line
Car title loans can be beneficial when you are in need of quick cash. Loans are available for vehicles older than 10 years.
Many lenders will work with you even if you want to use an old car as collateral and this has nothing to do with that decent movie Collateral with Tom Cruise and Jamie Fox (the ending was not that impressive but let’s get back on topic). However, you need to make sure that you have a free and clear title.
Lenders base the loan amount on the equity you hold in your vehicle.
You can qualify for a better loan amount, regardless of the age or mileage, if your car is of high value and if your car is like the one that Lockdown turned into in the amazing Transformers 4 movie which it most likely is not (that car was amazing!), then you can extract some serious coin from it.