It’s a difficult situation that many people need to deal with at one point or another – getting a loan when they don’t currently have a job. Most lenders are understandably wary about loaning money to someone who isn’t currently making money, but fortunately, there are still options available. One reason why title loans are […]
It’s a difficult situation that many people need to deal with at one point or another – getting a loan when they don’t currently have a job. Most lenders are understandably wary about loaning money to someone who isn’t currently making money, but fortunately, there are still options available. One reason why title loans are good idea is that this type of loans depends entirely on your car, which means both your income and your credit score don’t play a part.
When it comes to loans for unemployed people, title loans are definitely the fastest and most convenient option. But how do they work, and are there risks involved? We answer those and all your other questions about title loans below.
Why Title Loans for Unemployed People?
To answer this, it’s essential to understand the difference between the application process for a typical loan and the application process for a title loan.
Most loans, especially those offered by banks or credit unions, require quite a bit of documentation. You may need to show them tax returns, paystubs, banking records and more. If you’re currently unemployed, the lender may deny your application without any further consideration.
Most title loan regulations occur at the state level, which means the application requirements can vary depending on the state that you’re in. However, the most common requirements to get a title loan are your ID to verify that you’re 18 years of age or older, your car title and your car. That’s all you need.
Since you don’t need to bring proof of income, it’s easy to get a title loan while you’re unemployed. Now, there are a select few states that require title loan companies to check the borrower’s income and verify that they make enough to pay back the loan. Although you’ll need proof of income if you’re in one of these states, title loan companies tend to be more flexible regarding your income. If you’re self-employed or a freelancer, you’ll like still have an easier time getting a loan through a title loan company.
How Much Money Can You Borrow with a Title Loan?
So, you know title loans work well as loans for unemployed people, but can you borrow as much as you need? That will depend on your car.
The title loan company will carefully consider your car’s value to determine the amount they can lend you. They will typically go through a short process to calculate the maximum title loan amount:
- Plug your car’s information, including the make, model, style, year and approximate mileage, into a vehicle value database, such as the Kelley Blue Book site.
- Take a look at your car to evaluate its current condition.
- Match the car’s current condition to the value listed for that condition in the vehicle value database.
- Set the maximum title loan amount at a percentage of the car’s value, with 25 to 50 percent being the most common range.
Let’s say that the lender calculates your car is worth $10,000 in its present condition. They will likely offer to loan you anywhere from $2,500 to $5,000. By lending you less than the car is worth, the lender minimizes their risk if you default on the title loan.
Remember that states may also limit the amount that you can borrow. For example, a state may have a title loan amount limit of $2,500 or 50 percent of the car’s current market value. There are plenty of states that don’t have any such limits, though.
What Are the Risks with a Title Loan?
When you get a title loan, you are using your car as the collateral. You get to keep your car while you pay off the loan, and the lender just hangs on to the title, but if you default, then the lender can repossess the car. After that, they can sell it.
What this means for you is that it’s crucial for you to have a plan in mind to repay the loan. You can get a title loan while you’re unemployed, but it’s dangerous to get any sort of loan when you have no income and no way of paying it back. Before you finalize your loan application, go over the terms, including when payment will be due.
Make sure you know how you’re going to make enough money to pay back your title loan. You can usually renew title loans when necessary, but this costs you a bit extra, which means you should only use it as a last resort.
Quick Cash When You’re Unemployed
If you have a new opportunity to make money coming up or you’ll be starting a new job soon and just need some quick cash to tide you over, a title loan is an excellent solution. You can usually get one the same day that you apply, and as long as you pay it off when it’s due, you won’t have any issues.
Benefits of Title Loans
Title loans are loan funds secured using your car as collateral. Title loans are sometimes called auto or automobile title loans. No matter what name they are called, title loans are a quick and easy way to obtain cash.
How Can You Get a Title Loan?
If you own a vehicle, you can easily qualify for a title loan. There are no credit checks, no bankruptcy history interrogations, and no stressful moments wondering how to get a title loan without a job. The application process is simple and merely involves verifying vehicle ownership.
How Can You Drive Your Car if You’ve Sold It to Obtain Title Loan Funding?
A title loan is not the same thing as selling your car. Once the cash is yours, you’re still the owner of your car and can drive it anytime you wish. A title loan can help you stay in the driver’s seat while you enjoy the cash your car can bring you.