Car title loans are a way to borrow money, quickly, using the equity in your vehicle as collateral. This makes them secured loans and also makes the vehicle used to secure the loan an essential part of the transaction.
In fact, vehicle value is usually the number one factor in determining the actual title loan amount, not credit score or credit history. This means that both the vehicle condition and the vehicle history are important aspects for the lender to consider when appraising the vehicle.
There are several types of title loans, many of them being online. These include both with and without inspections and with and without store visits.
A vehicle with a less than perfect history, like salvage history, will likely be worth much less than the same vehicle without history issues. This is especially true when getting a completely online title loan without a physical vehicle inspection.
Online Title Loans and Vehicle History with No Inspection
One of the most sought after loans for convenience is a completely online title loan with no inspection and no store visit. For these loans, there is no part of the process where you show the vehicle to the lender, meaning it is a 100% virtual appraisal and inspection.
For these types of appraisals the lender needs to rely on the information available. Since an in person inspection of the vehicle is not available, other information needs to replace this inspection. This includes vehicle history related to title loans.
For the overall condition of the vehicle this is replaced by pictures. Pictures can only tell so much though. They don’t provide nearly the level of granularity that an in person examination provides.
This is where a vehicle history report helps. For those with items in the vehicle history report that would lower the value, this is not an advantage. An in person inspection would provide a more accurate valuation.
Title Loan Vehicle History Factors
There are several factors that can have a greater effect on the title loan amount related to vehicle history for completely online title loans with no inspection. These include:
- Salvage History
- Fire and Flood History
- Rental Use
- Cab or Hospitality Use
Each of these items mentioned will effect the title loan amount regardless of whether of not it is an in person loan or an online title loan. For online title loans, however, the lender may lower the value of the appraisal, and therfor the max loan amount, by slightly more to mitigate the risk of making a title loan without seeing the vehicle. For example:
Vehicles with Accidents
Appraising a vehicle that has been in an accident in person in much easier than virtually. Some vehicles can be repaired wit close to perfect condition after an accident.
Others can have paint that is not blended and line that aren’t straight. This can make a big difference to the vehicle’s actual value. Without seeing the car in person, the lender will usually err on the side of caution.
The same is true of salvage history. There are some vehicles with a salvage history that have been restored ver well and other not so much.
Pictures don’t always show this well, and sometimes taking a look at the vehicle, and under the vehicle at the frame, is the only way to determine the quality of the repair.
Some vehicles with salvage history look and drive like ay other vehicle without, and some have issues.
Fire and Flood Damage
Just like with salvage history fire and flood damage will have a similar effect on the max title loan amount, particularly with completely online title loans. The same reasoning applies here.
There are varying degrees of damage attributed to both fire and flood, along with varying degrees of repairs. A vehicle may have flood history where the actual damage was minimal, and the opposite is also true.
This is very hard to tell without a physical vehicle inspection. Same with fire damage. With just pictures it can be very difficult to tell the level of damage done and how well the vehicle has been restored.
Rental and Hospitality Use
Some rental companies meticulously maintain their fleet of vehicles and sell them with low mileage. Others do not. Some rental cars are treated well, some are not. This leaves some questions that not able to be answered with pictures and a virtual inspection.
Additionally, some cab companies keep their vehicles in excellent shape, and others don’t. This, again, is impossible to tell through an online title loan with no store visit and a completely online appraisal.
To adjust for the unknown the lender will often err on the side of caution and lower the vehicle value to be safe. This, in turn, reduces the max loan value.
In today’s environment where many borrowers prefer an online title loan with direct deposit, and more specifically one without an inspection, there may be a case for wanting a physical in person inspection.
For those without a perfect vehicle history, but with a well restored vehicle, the option to have the vehicle looked at may provide a more accurate valuation.
This, of course, depends on whether or not you need to borrow close to the max for what your vehicle is worth. If so, then an in person title loan may be a better option.