It can be difficult for you to get approved for a loan while you are unemployed. Many banks will not lend to people who do not have jobs because it is too much of a risk for them.
However, you still have options. One of the options that you may want to consider is title loans.
Shutterstock Licensed Photo – By Dean Drobot
What are Title Loans?
A title loan is a type of loan where you use your vehicle as collateral. The value of the vehicle is a guarantee to the lender that the loan will be repaid.
This makes it less risky for the lender to loan money. However, if the loan is not paid back, then you may lose your vehicle.
How to get a Title Loan
There are a few steps that you will have to take to get a title loan while unemployed. You will need to select a lender who gives out these types of loans. In order to get a loan, you will have to prove that you are the owner of the vehicle. You will have to provide them with your title.
Even though you are unemployed, you will have to provide the lender with a source of income. If you are getting unemployment compensation, then you will be able to use this as a source of income.
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Any type of documentation that you can provide that proves you have income coming in will work.
In some cases, lenders do not check your credit. That is why you will likely be able to get approved for a loan if you have bad credit.
How Much Money Can You Get?
It is important to note that you may not be able to get as much money as you want. The value of your car is one of the main things that lenders will take into consideration when deciding how much to lend you.
The amount that you are approved for will typically be between 25 and 50 percent of what your car is worth.
For example, you have a car that is worth $20,000. You will likely be approved for $5,000 to $10,000.
There are also some states that will place a limit on the amount that you can borrow. For example, there are some states that will restrict the loan amount to $2,500.
How Long Will I Have to Pay the Loan Back?
The lender will determine how long you have to pay back the loan. Most lenders will give you anywhere from 30 days to several years to pay back the loan. It is important for you to have a repayment plan in place. If you default on the loan, then the lender will repossess it. After that, they will be able to sell it.
That is why it is important to go over the terms of the payment before you sign on the dotted line. You should make sure that you have the money to pay back the loan. You may be able to renew the loan, but you will have to pay the loan back.
