Taking out a vehicle title loan can be a good way to get out of a pinch. All you essentially need is a vehicle in your name, a lien-free title, and the income for loan repayment. While there are commonalities that all such lenders share, some loan features are determined by state and local governments. Having said that, here’s what you should know about car title loans in Texas.
What is a Vehicle Title Loan?
These are short-term loans — terms are between 15 and 180 days in Texas — that require that you have a vehicle and clear title. In other words, the vehicle must be paid off.
In exchange for such a loan, you’ll be required to pledge your vehicle as collateral. You’ll still be able to keep and use it as you normally would, however. You simply must allow the lender to keep the vehicle title until the loan is repaid.
Note that since the loan is secured by your vehicle – car, truck, recreational vehicle, motorcycle, or boat – you could lose the property to seizure if you fail to make timely payments. So, be certain of your repayment ability.
Do I Need Good Credit?
No, and that’s a key title loan feature. Unlike banks and other traditional lenders, title loan companies will not base decisions on your credit history. While they might run your credit, they won’t focus on it. They have your unencumbered title as security.
What Do I Need?
In addition to a vehicle in your name and lien-free title, you must possess a government-issued photo identification and, for title loans in Texas, be at least 18 years old. You also must be a Lone Star State resident and show proof to that effect (utility bill, lease agreement, etc.).
Further, you must show proof of income. If you’re employed, you can submit paystubs or bank statements and the like. If you don’t have a job but you do have regular income – retirement, pension, rental property, Social Security, etc. – that would work, too.
How Much Can I Borrow?
Since your credit isn’t a factor here, the title company decides how much to lend you based on your income and ability to pay, and details about the vehicle you hope to collateralize: make, model, year, mileage, and overall condition. In lieu of an in-person appraisal, you’ll simply submit that information along with photos of the vehicle, including shots of the VIN and odometer.
Otherwise, the amount you can borrow depends on local Texas governments. In Killeen, for example, loans are capped at less than 20 percent of the borrower’s monthly income. Generally, though, people can borrow between 25 percent and 50 percent of their vehicle’s value. Most loans range between $100 and $1,000.
How Long Does It All Take?
The process is actually quite fast. In Texas, you can apply online and get an answer that day, sometimes within minutes. Once approved, you can have your cash in hand the next day. Many lenders offer direct deposit, so if you want to be paid that way make sure your account is set up for ACH transfers. They also may permit you to pick funds up at a brick-and-mortar location or local MoneyGram. Some loan companies will, if you prefer, drop an overnight check in the mail.
If you want a car title loan in Texas, shop around a bit for the best terms for you, including interest rates. These loans offer a great, speedy way out of a tough spot, but if you take one out, just be sure you can repay it.