Do you need a source of quick cash but have a bad credit score? If so, a car title loan might be an option you should think about.
However, car titles usually have many more requirements for borrowers than smaller loans would. One such requirement might be an income verification, which is basically the lender making sure you have a source of income that will help you be able to pay the title loan off. But what if you don’t have a source of income? Can you still get car title loans with no income verification? Keep reading and you’ll find out!
Before we get into car title loans with no income verification, it is important to understand what a car title loan actually is.
A car title loan is a loan that requires you, the borrower, to use your car as collateral for a loan. Two main types of loans exist: secured loans and unsecured loans. Unsecured loans are loans that do not require the borrower to put up collateral for the loan. These loans are riskier for lenders and are less risky for borrowers.
On the other hand, secured loans require the borrower to put something up for collateral. Common secured loans are car loans and mortgages, which require the borrower to use their car or their house as collateral. If they fail to pay back the loan, the lender can take whatever the borrower put up for collateral, like a car or a house. As you can see, secured loans are riskier for borrowers and are less risky for lenders.
A title loan is a secured loan. In a title loan, you temporarily give up the title of your car in exchange for the cash from the loan. When the loan is paid off, you get your car title back. If you fail to pay back your car title loan, a traditional lender has the ability to legally take the title of your car from you, which means you lose your car. Unfortunately, these loans are pretty difficult to pay back, which causes many people to have to forfeit their cars.
Title loans are generally used by people with poor credit scores. Individuals with better credit scores are often regarded as “safer” investments by lenders while individuals with bad credit scores are regarded as “risky.” To let someone with a bad credit score get a loan, a lender might require the borrower to use their car title as collateral for the loan.
As you might be able to see, car title loans are extremely risky for borrowers. Cars are often extremely important parts of our lives. We rely on them to go to work, get groceries, and to get just about anywhere. If you rely on your car, having to live without one might be an extremely difficult and burdensome thing.
Car title loans may not give you more cash than your car is worth, but they still might require you to give up your car title. Think about it; you get a $2,500 car title loan but your car is worth $5,000. If you fail to pay back your loan, you not only lose your car but you’ve forfeited about $2,500 in value as well.
Oftentimes, car title loans are expensive and must be paid back in a relatively short period of time. This makes paying these loans very difficult. If you can’t pay back one of these difficult loans, you will lose your car. As you can see, car title loans can be extremely dangerous and problematic and can pose a huge risk for any borrower that wants to get one.
Most lenders will want to see that their borrowers have a source of income. A source of income is not just a job, however. There are many sources of income other than jobs, such as government benefits, payouts from investments, and others. Whatever the source of income is, lenders will like to see that this income is substantial and is regular.
If borrowers have a source of income, this shows lenders that they have the means to be able to pay back their loans or credit cards. If they do not have a source of income, lenders will be unsure if the borrower will be able to pay off the loan and they will likely not approve the borrower.
However, not every lender requires borrowers to have a source of income. One such loan is a car title loan. While many lenders will require a source of income for their borrowers, not every car title loan lender will require that the borrower has a source of income.
Many of the lenders are satisfied with using your car title as collateral, and they will not necessarily need to see income documentation. For some of these lenders, they don’t exactly care if you have a source of income. If you default on their loan, they will simply be able to take your car and sell it; oftentimes for thousands of dollars. Lenders like these will allow their borrowers to get their car title loans without income verification.
The amount of money you can get from your car title loan mostly depends on how much your car is worth. Remember that lenders can take your car if you fail to pay back your car title loan. As such, lenders will generally favor more expensive cars. If you have a car worth $5,000, you will be able to get a larger car title loan than if your car is worth $2,000.
Having proof of income can be difficult. For one, you may not have a job that provides you a steady source of income. You may be an independent contractor or a gig-economy worker that gets paid in very irregular intervals and in very different amounts. If this rings true for you, you might get your loan application denied even if you are making money.
If you do not have proof of a source of income or your lender does not approve your source of income, you will need to show your lender that you are trustworthy in other ways so that they will not deny your loan application. Here are some of the best ways to do that:
As we discussed before, car title loans are most often used for people with bad credit scores. Using your car title as collateral for your loan greatly lowers the risk for lenders and they are more willing to lend to people with worse credit scores as a result.
While you can qualify for a car title loan with a bad credit score, you will not necessarily be automatically approved for your car title loan. Many lenders have a credit score requirement that their borrowers must meet. If your credit score is below this threshold, you could find yourself getting your car title loan application denied.
Some car title loan lenders may not even check your credit at all. Some lenders promise to never do a credit pull, which saves you from getting a knock on your score from a hard inquiry and allows you to get a car title loan whatever your credit score.
Car title loans can be difficult to understand. While we hope we cleared some of the air for you, you may still be wondering whether you should get a car title loan or not. Let’s take a look at some of the pros and cons of car title loans so you can properly make an informed decision about car title loans.