Loans are not only for those who still have a job in this challenging economy. Many people who have hit hard times are surviving on Social Security or unemployment benefits. Despite barely surviving on these social safety nets, some may need to borrow money. An auto title loan is one of the few ways to borrow money with no job as an unemployed person.
Auto Title Loan Collateral
An auto title loan uses a car as collateral in case the loan is not repaid. It would appear that there is no risk to the lender even if the borrower has no job since the car can be sold in order to repay the loan. However, there are many cases where the sale falls short of repaying the entire loan. For example, what happens to the car's value if it suffers a transmission failure after warranty expiration which typically costs several thousand dollars to fix? The car may not be worth enough to pay the loan after an auto auction.
Although the amount loaned varies from one lender to the next, most will not loan out more than 40% of the wholesale value of the car. Since all auto title lenders require a clear title or substantial equity in a car, most vehicles will be several years old when a title loan is needed. By then, the value of the car will probably be significantly reduced. This means borrowers should not expect a huge windfall when asking a lender how much they can borrow.
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