A registration loan is a short-term loan issued to individuals with an automobile registered or leased to their name. Even though a registration loan requires an individual to provide vehicle registration details for an automobile that is either leased, financed, or owned, the lender will not take the car outright.
On the other hand, the payment capability of the client is evaluated based on your current employment, business, or any other income-generation activity. Nonetheless, registration loans are still considered to be high-interest loans.
How Do Registration Loans Work?
Registration loans are designed to help you get some quick cash when one has a pressing financial need. Some registration loans allow you access to a proportion of the value of your automobile if it is registered to you as either a purchased or leased car. Moreover, the borrower is allowed to keep using the registered vehicle used to borrow a registration loan while he continues to service the line of credit.
To borrow money, you need to understand the average registration loan process. The first step is identifying an accredited registration loan lender agency within your zip code or local area. One can locate potential lenders in their area through the internet since most lending agencies currently have an online presence. After locating a potential lender, you should review their lending policies and rates; choosing the lender whose practices and amount of money offered as credit best suits your situation is important.
Subsequently, you should fill in an application form to apply for a registration loan from the lender of your choice. Presently, some lenders offer loan application forms on their online platforms. However, you can still visit the lending agencies’ premises to fill out and submit the form in person. On your way to filling out the registration loan application forms, a borrower should have reviewed all the loan requirements stipulated by the lender. Bringing along the required documents will ensure a convenient loan application and issuing process.
How Much Can I Get for a Registration Loan?
Typically, registration loans are an unsecured line of credit. Therefore, the amount offered for a registration loan is lower than that issued for a title loan. Depending on the borrower’s source of income, a registration loan may be issued based on their assessed capability to repay the loan.
Even though the vehicle registered to the borrower is not used as collateral for an issued registration loan, the automobile’s value can still influence the amount of money a lender issues as a registration loan. This is because some lending agencies issue a portion of the resale value of the borrower’s registered car as the amount of money offered for a registration loan. Therefore, the higher the value of the vehicle registered to the borrower’s name, the more likely the borrower will be awarded access to a substantial amount of money as a registration loan.
What is Required for a Registration Loan?
Each form of credit issued to a borrower as a personal loan mandates the borrower to meet several expectations before they qualify to receive the money offered. The loan requirements vary from one type of loan to another, depending on the lender and the lending category. There are numerous requirements associated with a registration loan.
The first requirement in the application for a registration loan is a driver’s license. The borrower intending to apply for a registration loan must present a current driver’s license registered in the state where they borrowed the loan.
The second requirement for potential borrowers is the registration of a vehicle. Each borrower is expected to present a vehicle’s registration to their name as a leased, financed, or owned vehicle.
The third lender’s condition for borrowing registration loans is presenting the automobile information for the vehicle registered to the borrower. The above information includes the vehicle’s make, model, and current mileage.
Finally, it is critical that during the period when the borrower is applying for or repaying the registration loan, the vehicle should not have any attached liens or repossess. You should be able to pay the loan proceeds within the stipulated time.
Registration Loans vs. Car Title Loans
It is common for people to assume that registration loans and title loans are essentially the same. This assumption can be attributed to multiple factors, such as ignorance, misinformation, a lack of exposure, or biases. Nonetheless, title loans and registration loans have multiple similarities and differences.
Similarities Between Registration Loans vs. Car Title Loans
Both car title and registration loans do not impact the borrower’s credit rating. Furthermore, they do not work like personal loans, where the lender looks at the credit history. This is because both loan forms are not issued by traditional banking institutions but rather by alternative credit finance agencies. As a result, your loan borrowing and payment pattern for auto title loans and car registration loans are not reported to credit bureaus.
Both car title loans and vehicle registration rates have high approval rates. Given that your credit score does not influence your qualification for a title loan or registration loan, one is likely to attain either of the above loans if they meet the basic application requirements. You may even have the money in your bank account on the same day.
Moreover, you can pay your secured loan early without exposing yourself to debt. Since the above types of loans are usually borrowed to address priority financial deficits, if the borrower transcends their financial shortages, they are likely to repay the loan in full even before the repayment period is over.
Besides, auto title and registration loans can be accessed from the comfort of a borrower’s house. Currently, most alternative landing agencies have an online presence where they can interact and engage with their market. As such, the loan application process for the above loan categories can be executed digitally.
Differences between Registration Loans vs. Car Title Loans
Car titles indicate that a borrower owns the vehicle. In contrast, a car registration shows that an individual has registered a vehicle in a certain state by paying the necessary fees and taxes to have the vehicle under their name. Car titles can only be changed if the ownership of the automobile changes. On the other hand, car registration documents require regular renewal.
The amount of money issued for a car title loan is significantly more than that offered for car registration. The first reason behind the above difference is that car title loans are secured by the resale value of the borrower’s automobile. In contrast, registration loans are unsecured because they have no collateral.
Moreover, auto registration loans have higher interest rates than car title loans. The interest rates for registration loans are higher because the loan category has a higher risk than car title loans. In turn, a registration loan will likely cost the borrower hundreds or even thousands of dollars more than a title loan of the same amount.
The Merits and Demerits of Registration Loans vs. Car Title Loans
The main merit of a car title loan relative to a registration loan is that for a title loan, you can access a large amount of money equivalent to the resale value of your car. However, the above attribute can also be a demerit since the borrower places their vehicle at risk of repossession if they default on their payment.
On the other hand, the basic merit of a registration loan relative to a title loan is that it has no risk of losing the vehicle registered to the borrower. This is because a registration loan is unsecured since the borrower is not mandated to provide any collateral for the credit line. However, the above attribute is also the underlying reason behind the amount of cash between the two types of loans.
How Do I Get a Title Loan Instead?
If you were considering borrowing a registered loan but have changed your mind and would like to pursue a title loan, a few requirements are necessary for the process. These are:
- A government-issued ID
- Your car title and your car
- The vehicle details i.e, registration number, model, and insurance
- Proof of residence
- Proof of income
A registration loan is a short-term credit finance option issued to individuals with an automobile registered or leased to their name. Registration loans are designed to get quick cash when one has a pressing financial need. Typically, registration loans are an unsecured line of credit. Therefore, the amount offered for a registration loan is lower than that issued for a title loan. As such, it is vital to increase the awareness of the masses about their credit extension to equip them with the tools required to cope with financial emergencies.