Auto Title Loans

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Where Is The Downside?

So, fast cash, easy to obtain, where is the downside? Certainly we have all seen the commercials on TV, where they come out after having received their loan, smiling. First let’s talk interest. Most interest rates for these types of loans fall between 200 and 300 percent per year. When you first begin it doesn’t seem so bad because of the way the auto title loans are presented.

The interest is represented as a monthly amount, because you only need the money for a month.  “Look, we only charge $25 for a $100 dollar loan.”  You figure it is only for a month, then you pay it off and down the road you go. These loans are almost never paid off in the first month. Most borrowers who actually repay the principal amount take 8 to 10 months to do it, if ever.

Second, let’s talk about your car. The sad fact is, most people who enter into these loans will lose their car.
If one payment is missed or if at the end of your loan term, you are unable to make the balloon payment chances are very good you are going to have turn over your car to the  loan company.

They will take and sell your car regardless of what you owe. You will lose all equity in your auto if you
default on the loan. This is a huge risk for you to take for such a small amount of money to tide you over.

Fulfilling A Need

Auto title loan companies say they are only fulfilling a need in the marketplace. It seems that need is to have your car.

It seems, regardless of the warnings issued, many are still dead set on doing this. Just be certain to throughly research your choice before signing the dotted line.