When you find yourself in need of some quick cash, car title loans are a great way to close that financial gap, as long as you are prepared and know how loans work. Just like any other secured loan, in exchange for some cash today, you agree to pay back that money with interest at a later date and if you fail to make a payment or repay what you owe, you offer the title of your car as collateral.
Now the amount of cash you are offered is dependent upon the value of your vehicle, and it isn’t irregular for the loan amount to be around 25 to 50% of your car’s appraised price. It is quite clear that this deal is in favor of the lender, and there is plenty of room for predatory lending within the fine print, so who you choose to borrow money from is more important than you may initially think.
You can sidestep signing up for a predatory loan by doing the math beforehand so that you know what loan offers will get you where you need to be and what offers will set you spiraling into debt. Start by calculating how much money you have leftover, after your necessary expenditures. If any offer asks for a regular repayment that is too close to that number, walk away. A good rule of thumb, is if the deal sounds too good to be true, it often is. Many predatory car title loans will hide terms and conditions that cause an inflated interest rate once a payment is missed, so be thorough when selecting a car title loan/lender.
When it comes to learning about car title loans, this is just the tip of the iceberg, so talk with a financial advisor and you are well on your way to coming out of a loan successfully.