If you’ve been affected by the COVID-19 pandemic or the economic downturn, you may have had your hours cut, been furloughed or lost your job due to restrictions put in place in response to the virus. Not everyone has emergency savings to fall back on, and unemployment benefits may not be enough. Borrowing money can be difficult if you don’t have regular work, but there’s one option that can loan you the emergency money you need – even if you’re claiming unemployment.
How Can I Borrow Money If I’m Not Working?
The number of Americans claiming unemployment has skyrocketed to record levels, leaving millions wondering how to pay for food, rent and utilities. If you’ve been using your credit cards to pay for these essentials, your credit score has probably taken a hit, especially if you’ve only been making the minimum payments while your balances have been going up.
In this situation, a traditional lender may be unwilling to help. The reality is that some lenders may be unwilling to lend to someone who’s out of work. Many lenders will also require a great credit score to even be considered, and they can be notoriously slow in deciding and getting you the money, you urgently need. You might need the money within days, but some lenders can take weeks.
Friends and family members might be able to lend you small amounts, but the chances are they may also need the money themselves. If they have the money to spare, this could be a good option as the loan could have little or no interest. A friend or family member is also more likely to be flexible with your payments.
Can I Get a Payday Loan If I’m Out of Work?
If you can prove some form of regular income, you may qualify for a payday loan. Most payday lenders are willing to lend to those claiming unemployment, but there may be a few drawbacks. For starters, you may only be able to borrow a small amount of money, perhaps just a few hundred dollars.
You’ll also need to repay the money within a relatively short period of time. Since these loans are designed to be repaid when you get paid, you’ll probably need to pay it back within a month or less. Lastly, the fees and interest can be high. Many states allow a 15% monthly fee, while some states allow lenders to charge even more. For example, if you borrow $500 and agree to pay it back within a month, you’ll need to pay $75 in interest, making your total $575.
This might be affordable as a one-time expense, but if you’re unable to pay and your lender extends the loan by another month, you’ll have to pay another 15%.
So what are the alternatives?
Can I Pawn My Car If I’m Out of Work?
Pawn loans are an option for almost anyone who needs money quickly, but it really depends on what you’re trying to pawn. Many of us don’t have valuable heirlooms, collectable items or expensive jewelry they can use for quick cash, and most of us don’t like the idea of using items with personal and sentimental value as collateral for a loan.
That being said, it could still be an option if you have a car and need cash quickly. A pawn loan works in a similar fashion to a payday loan; you borrow the money and agree to repay it within a month or so. While you can get a lot more money by pawning your car – perhaps thousands of dollars, rather than hundreds – they can be an expensive solution, especially if you’re unable to repay on time.
Interest rates and fees will vary by state, with some states allowing a monthly interest rate of 25%. That means the annual percentage rate (APR) could be as high as 300%, and the lender could apply additional fees on top of that.
Of course, there’s another potential downside to a pawn loan: you may need to surrender your vehicle for the duration of the loan. While not all lenders require this, it could be a major inconvenience to find alternate transportation while you repay the money.
Is an Auto Title Loan a Good Choice If I’m Out of Work?
An auto title loan works a little like an auto pawn loan, but it allows for greater flexibility and typically costs a lot less. It’s a quick and easy process that can often be completed in under 24 hours1,3.
The lender will evaluate your vehicle and then, if it holds enough equity, you’ll be offered a potential loan amount. Once funded, the lender applies a lien to your vehicle’s title, which is removed once the loan has been repaid.
Incidentally, having a lender’s lien on your vehicle does mean the lender owns your vehicle. In other words, if you’re unable to make payments, the lender has the legal right to repossess your vehicle to recover what you owe. You also won’t be able to sell your vehicle (or transfer ownership) until the loan has been repaid, and if your car is involved in an accident, your insurance company is legally required to pay the lender first.
There are two main differences between an auto pawn loan and a title loan:
- You have years to repay a title loan, not months; and
- You’re not required to surrender your car to the lender until you repay the loan.
Whether you choose an auto pawn loan or a regular title loan, it’s also worth bearing in mind that the amount offered is not the true value of your car. A lender will base the value of your vehicle on its Black Book value, which differs from the Kelley Blue Book estimate. The Black Book allows a lender (or dealership) to see how much the car is worth at auction, which is important if you’re going to lend someone money using the car as collateral.
If the lender repossesses your vehicle, they’ll probably sell it at auction to pay back the loan and any costs. Beyond this, since auto title loans usually have terms lasting two to four years, your vehicle will depreciate over time and the lender will want to take this into account.
Auto title loans can be an easy and attractive option for anyone needing cash urgently, especially if your credit is challenged. Lenders are often primarily concerned with your ability to repay the loan and the value of your vehicle and are far more likely to accept alternative forms of income. That being the case, even if you’re relying on social security benefits, you could still borrow the money you need.
Introducing a Better Auto Title Loan Option
There are many different auto title loan lenders in the United States, but there’s one auto title loan servicer that has the stability and security you need in these uncertain times. LoanMart has been established for nearly twenty years and has serviced over 250,0002 borrowers in more than twenty states.
By going to https://www.800loanmart.com/ or calling 855-419-5077 toll-free, you could find out in minutes if you qualify for a loan1. Auto title loan lenders require little documentation:
- Proof of income – pay stubs, bank statements and government award letters are all accepted
- Proof of residence – mail with your name and physical address
- References – can be either personal or professional
- Vehicle title – you must be named as the owner of the vehicle
- Photo ID – any government issued photo ID, such as a driver’s license or passport
To make life even easier, the documents can be submitted online, via email, or even via an SMS text message. The whole process can also be completed in 24 hours3 or less, and with the funds deposited directly into your bank account, there’s no need to even leave the comfort of your home.
Being out of work doesn’t mean being out of options. By applying for an auto title loan serviced by LoanMart, you could have access to the money you need. And with your money in less than 24 hours3, years to pay and no pre-payment penalties, an auto title loan offers the flexibility you need to get through the current financial crisis. Call 855-419-5077 toll-free or go to https://www.800loanmart.com/ today to get started!