The logic behind this particular requirement is that lenders feel if the applicant does not have a job, it is going to be difficult for the applicant to repay the money borrowed. It is a misconception, but that is the fact. That is how it goes, and the applicant does not have a choice other than to fulfill the requirements stated by the lenders. Well, let is think differently. It is not impossible. There is a way you can still avail credit even if you do not have a job. The article tries to explain how to go about getting your car loan with no job and no credit or poor credit ratings.
The importance of collateral or a guarantee
All secured loans require some sort of collateral or a guarantee. In case of mortgages it is the house that provides the collateral. While going in for car loans or automobile finance, it is the vehicle – the car – that acts as a guarantee. Lenders generally provide around 75% to 80% loan against the guarantee provided. That means if the house is evaluated at $100000, it is possible to get a loan of $75000 to $80000 max. The same is true while availing a car loan. The applicant needs to make a down payment that is approximately 20% of the car is price. The remaining 75% to 80% of the car is cost is provided by the loan provider. The fact is even with a collateral, lenders prefer the applicant to have a job. It is not important whether the borrower can come up with an alternative source of income – that does not count. To get the loan you need to have a “recognized” source of income. And in most cases, the most legit source of income is the job. In short, by just providing the collateral, the lender is not going to grant you the loan unless you have a stable job. While financing your car, as far as orthodox credit lending institutes are concerned, your job is your credit for a car loan.
Get your car loan without a job even with bad credit ratings and no collateral
When regular or standard options do not work out, one has to go in for alternative options. One cannot provide what one does not have. There is an alternative available. The answer lies in acquiring the required credit from places or people who do not need any security or credit ratings. One such place is the pawn shop. Pawn shops have existed for many years, and almost everybody knows how they operate. It is one of the best place to buy used goods that do not cost much, and it is also a place where you can offer some commodity that is not very expensive, and get some money in exchange. It is not difficult to avail credit from pawn shops, and the main advantage is you get to decide how much cash you need without presenting any documents or credit rating reports. It is worth knowing how pawn shops work.
How pawn shops work
In case of typical car title loans, the credit lending company determines the price of the car based upon the car is resale value, and provides a loan against that value. The lending company retains the car is title or ownership documents till the loan is redeemed. Generally a car title loan is of short duration, and associated with a high rate of interest. The rule is if you do not repay the loan within the stipulated time, the company can possess the car and sell it to regain the capital lent along with the loan is interest. That is how an auto title loan works.
If you possess some jewelry, or some other valuable, it is possible to “pawn” it in a pawn shop. A person evaluates your possession and comes up with an appraisal value, and lends money based upon the appraisal. You are supposed to repay the money after a certain time. The pawn shop charges interest in reference to the money given. The interest charged is usually around 10% and varies from state to state. This particular method of lending money in exchange of some “possession” is basically a loan. It is a special type of loan because the pawn shop does not require any documentation, or your credit history, while lending the money. The money can be used to buy your car. And just as in the case of a car title loan, you forfeit your pawned possession if you can not repay the money borrowed. It is an alternative way of financing a car with no job in hand. Certain pawn shops specialize in providing capital for car loans.