What's All The Hype About Car Title Loans?
Updated: Jun 15, 2019
I think we would all agree that taking out a loan to help out with our finances is pretty much a last resort. Let's face it, who wants the burden of making payments every month on money we have borrowed, spent, and now owe?
Taking out a title loans open now, cash advance, or yet another credit card isn't the first choice in getting caught up with our budget. So why are there so many car title loan, payday loan, and installment loan lenders out there willing to hand out cash overnight with barely any questions asked?
Because when times are tough, the checkbook is at a negative, and the bills need to be paid, people look for the quickest and easiest way to get some cash. Fast cash lenders, such as payday loan lenders, loan on the basis of the borrower's job and income and the assumption that they will be paid back with that person' next paycheck. Depending on how much the borrower makes, as well as the capped amount determined by the state the lender loans in, consumers can get anywhere from $200-$1500 directly deposited in their bank account within 24 hours of being approved.
Payday loans can be of help when their is a small financial emergency that needs to be taken care of but are expected to be paid back right away. If the borrower is not able to make full repayment, they can "rollover" their loan but this will end up costing them more in the long run. These types of loans are meant to be short-term, providing a temporary fix for one's finances. Car title loan lenders loan you money based on the value of your car or truck and require that you own the car and hand over the pink slip until you pay your loan back in full. They have the assurance that if you default on your payments, they can take you car as payback for what you owe. Car and auto title loans have become popular being that a person can borrow up to $5000 depending on how much equity their automobile holds. It's simple and fast process providing the borrower with a fairly large sum of cash.
Borrowing against your car can be dangerous, though, if making the loans payment s becomes difficult. Just like a traditional car loan, the lender has the right to re-posses the borrower's car should they go into default on their loan payments. Interest rates on these types of loan are much higher than traditional bank loans, credit cards and in some cases, payday loans. APR's (annual percentage rates) can be as much as 250% which can lead the borrower into a financial windstorm should there be an issue making payments. Keep in mind that these loan are also short-term in comparison to a personal loan one would take out with bank. You won't have years to pay you loan off.
Having been put into the "predatory lending" category by many consumers, car title loans are the subject of detailed reports put out by non-profit organizations such as Center for Responsible Lending and the Consumer Federation of America (CFA). These organizations seek to inform consumers about the dangers and lending practices of such loans.