Requirements for Auto Pawn Loans

For borrowers with subpar credit looking for quick cash, auto pawn loans are an option for generating the extra money needed for a purchase - and knowing the requirements for auto pawn loans is important. However, these short-term loans generally do not work in a borrower's favor if he or she cannot pay them off at the end of the term; whether it's two weeks or a month. An auto pawn loan is secured with the title of a vehicle that the driver owns free and clear. If unpaid, the owned vehicle can be repossessed, or the auto loan can be "rolled over" into a new loan with higher interest rates and more cost.

Auto pawn loans are generally easier to get than some other types of loans because the owned vehicle acts as collateral, but there are still a few general requirements for qualifying for this type of loan.

• Age and ID verification - many lenders require the borrower to be aged 18 or older with a valid driver's license or state identification. This is usually not the sticking point in an auto pawn loan however, but it's something to be aware of.
• Vehicle owned free and clear - in order to qualify for most auto pawn loans, the driver must own a vehicle free and clear with no liens on the title. In some cases, a driver can get an auto pawn loan using the title of a vehicle that is almost paid off, but this is not the norm. Generally, the owned vehicle provides qualified collateral that can easily be taken in the case of nonpayment on a current loan.
• Vehicle in good condition - in order to qualify for an auto pawn loan, most lenders require the vehicle to be in good condition with no extensive body damage, and no disqualifying characteristics such as an extensively damaged engine or transmission. Borrowers should beware of trying to use grounded vehicles to secure a loan, as this would generally disqualify them when the lender finds out about the impaired conditions of the titled vehicle. Potential borrowers may be required to show proof of the vehicle's solvency at the outset.
• Employment and income requirements - as mentioned, auto pawn loans are much easier to get than some other forms of loans. The lender may not look extensively at the borrower's credit since there is collateral on hand, but they will generally want to know whether the borrower earns enough to pay back the loan on time. That's why many lenders include income requirements for qualification on these types of loans.
• Loan terms and rollovers - as for the actual text of the loan, borrowers will be required to agree to a set loan period, which may be quite short, and a series of rollovers as a contingency for a non-payment situation.

Take a look at all of these considerations before applying for an auto pawn loan for the best chance at qualifying and securing a new loan with your old wheels.