Can You Get a Car Title Loan if You Are Self-Employed?

by Dennis Hartman ; Updated July 27, 2017

Unexpected expenses can leave you in need of quick cash, whether the source is medical bills, a necessary home repair or a cost related to a family emergency. Auto title loans are one way to borrow cash if you own your vehicle and are willing to use it as collateral. Even if you're self-employed, you can likely get an auto loan if you meet all of the other requirements.

Applying

When you apply for a car title loan, you'll need to provide several pieces of documentation and meet specific requirements. Some lenders may require your car to have a certain value, or only agree to issue loans for a percentage of your car's value. You'll also need to provide proof of income, proof of your address and proof of insurance that meets your state's minimum requirements. Policies for employment vary from one lender to another, with some offering loans to unemployed drivers who can show proof of disability benefits. In general, self-employment income is no different than income from a traditional job when it comes to qualifying for an auto title loan.

Proof of Income

Most businesses that offer car title loans require some form of proof of income. This is to ensure that you have access to money to pay back the loan. However, the source of your income is less important. Proof of income can be a recent pay stub, a bank account statement with deposits from work or your most recent income tax return. Another form of proof of employment is a 1099-MISC form that lists the self-employment income you received as an independent contractor.

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Reasons

Whereas some lenders, such as mortgage lenders, may require you to show a history of income to indicate job stability, a car title loan uses your vehicle for collateral and gives the lender something of value to take if you fail to meet your obligations as a borrower. This is the primary reason for less stringent employment records requirements. The loan is secured by the value in your car. Loans like credit card accounts are unsecured, which is why lenders require more information about your credit history and income before agreeing to issue you credit.

Warning

Car title loans represent risk for borrowers, especially those who are self-employed. They generally charge very high interest rates, which means you'll soon face monthly bills that add up to much more than you borrowed. If your source of self-employment income dips, you risk losing your car by failing to pay your bills. It's essential to take a realistic look at your income and self-employment prospects and make sure that you have an excellent chance of earning enough money in the near future to pay off the loan, with interest.

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