Title loans can be one of the scariest loans you can get and should only be used as a last chance way of ever getting a loan. Typically these loans should only be used as an emergency loan of any sort. The risk is extremely high for the loan so it is important that you are able to pay it back as soon as possible.
Because the loan period is typically less than 60 days, most are 30 days; the interest rate is extremely high. Title loans are not required to follow the same restrictions as credit cards, so fees and interest charges can be huge. Interest charges can be anywhere around 100% to 350% on the principle. They also will rarely disclose the interest rate in APY showing you a number much lower, but because the loan term is so short the interest charges grows rapidly.
Besides the interest rate being so high there is another stipulation to Title Loans, and that's your automobile. Because Title Loan's cater to emergencies and bad or no credit situations, they use your automobile as collateral. This is to protect them if you cannot pay. They will only loan out about 30-50% of the actual vehicle worth. They also will hold your title until you pay the loan back. While this may seem straightforward, and actually the concept is, it is very hard to pay back the loan so quickly with interest charges and a lot of people default on these loans because it is very easy to underestimate the payments needed for such a loan.
If you are in need of such a loan, you can look for other alternative choices that have better terms and you are not putting your vehicle up as your collateral. You can find other choices that will be beneficial and not having you scramble to keep one of your biggest assets from being repossessed.
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