How to Decide Whether You Should Get a Car Title Loan

Running low on cash happens to just about everyone from time to time.  If you don’t have great credit, you might not have a credit card on which you can rely, and you will probably not be able to qualify for a loan through most places. 

 

When people are desperate, they will often turn to other means to get the money they need.  Car title loans are one of the options available, but are they really a good idea?

A title loan will give you fast money from a lender, but you basically have to sign over the title of your car, making it a high-risk loan.  The loan will often have a pay back date of 30 to 60 days, and if you don’t pay them on time, the loan company will own your car and you won’t be able to get it back.  If you are having trouble making money now, imagine how much more difficult it will be if you have to forfeit your car, and lose your ability to travel to work.

You may still be thinking that a car title loan is your only option, but you have to read the fine print on these contracts.  The interest rates through these lenders are extraordinarily high, and they often fall into the category of predatory lenders. 

 

If you are determined to use one of these lenders, be aware that you are going to have to pay back much more than you borrowed, if you don’t want to lose your car.  If you manage to qualify for a loan extension (not everybody does), you can often paying back double the amount you initially borrowed.

Before you sign over your car title, make sure that you think through the entire process.  Check to see if there is any other way that you can borrow the money that you need, otherwise only go to a lender if you can ensure you’ll be able to pay the money back on time.

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