When researching title loan requirements often ‘proof of income’ is listed a one. The reality is some lenders do require proof of income and some do not. It all depends on that lender’s specific policies. Regardless, proof of income is not the same as proof of employment.
One can have income without being employed. While being fully employed certainly makes it easier to meet this requirement, it is definitely not the only way to do so. Any income that can be used to repay a title loan can be used as a source.
Other Forms of Income
Income to support repayment of a title loan can come from any reliable source. This can be employment, as mentioned, and can also be any other source. These can include, among others:
- Social Security – Monthly payment from Social Security.
- Annuities – payments from annuities or other investments that are regular.
- Pension – any pension payments or income that is predictable.
- Lawsuit settlements – a settlement on a lawsuit that is definite.
- Tax refunds – some refunds on taxes paid that you know are coming.
- Commissions – payments for commissions on completed sales.
- Property Sales – income from selling personal property including homes and vehicles.
- Inheritance – payments from an estate that are definite.
This is obviously only a partial list. Any income stream or source that can provide reliable funds during the title loan repayment term can usually be used to meet the requirement for proof of income.
Not All Lenders Require Proof of Income
It is important to note that every lender is different and that not all lenders require proof of income. Many do, so having this ready to provide when applying can save time. This is especially important for an Instant online title loan or any time sensitive loan request.
Just because it may not be a requirement for the loan does not mean that it is not a requirement for repaying the loan. Proof of income and ability to repay the loan are two very different things. It is also possible to get a title loan with no income verification.
Ability to Repay the Loan
All title loans, or least the vast majority, do require the ability to repay the loan. Making a loan that cannot be repaid is not good for either party. As part of preparing for a title loan borrowers should always ensure the payments are affordable.
As mentioned, the ability to repay the loan and employment are not the same thing. Some examples were provided above. Essentially, to be able to repay the loan you should have a definite source of funds that is greater than the loan repayment amount.
This source of funds can be anything that is reliable. Self employed individuals may have outstanding invoices or payments owed to them. Others may have monthly income from other income streams outside of regular employment.
Finally, as a last resort, you can sell the vehicle to repay the loan. Because title loans are limited to 50% of the vehicle’s fair market value, you should not run into an issue selling the vehicle to generate the funds needed to repay and close the loan.
As stated this is usually a last resort. It is a better option than defaulting on the loan and letting the vehicle be reposessed. In this case, you would be responsible for the cost of reposession and the lender ,ay sell the vehicle. You would have not control over the price.
Often, when lenders repossess and sell vehicles, they do so at wholesale auctions. Depending on the number of buyers and the demand for vehicles that day the sale amount can fluctuate quite a bit.
Additionally, not all states require the lender to return any surplus to the borrower. This means you will not receive any funds from the sale of the vehicle.
Summary – Title Loans and Employment
Do title loans require employment? No, but they do require some reliable way to repay the loan. This can be funds from any source that you can count on to make the title loan payments on time. Always prepare for the loan and make sure you can afford the payments without question.
Additionally, always read the loan agreement in full and understand all associated costs and fees. Make sure the total loan cost is reasonable.