Auto title loans: risks and alternatives

Car title loans give you quick cash – often between $ 100 and $ 10,000 – in exchange for your vehicle’s title as collateral. This is a type of secured, property-backed loan that the lender can take if you don’t pay.

These loans are expensive, with high fees and annual percentage rates often exceeding 260%. If you’re strapped for cash, you probably have better options, like requesting a advance on your salary or one alternative payday loan of a credit union.

How Car Title Loans Work

A potential borrower walks up to the lender with the car and its title. The lender assesses the value of the car and offers a loan based on a percentage of that amount. The average loan is $ 1,000, according to the Pew Charitable Trusts. Borrowers can walk away with the money in under an hour, but the lender keeps their title as collateral until the loan is paid off.

There are two types of auto title loans:

  • Single installment loans require borrowers to repay in one installment, usually 30 days later, and have an average APR of 300%.

  • Installment loans allow borrowers to make multiple payments, typically over three to six months, and have an average APR of 259%.

Typically, auto title lenders have fewer requirements for potential borrowers, such as not checking credit or requiring proof of income.

Nerdy tip: An installment loan can be a more affordable way to borrow money. These loans allow you to borrow the money all at once and then pay it back in fixed monthly installments over a period of months or years, instead of weeks. You won’t need to post collateral and loan amounts tend to be higher while interest rates are generally lower. Lenders usually require a credit check to apply, but you can find installment loans for bad credit.

Why Car Title Loans Are Risky

Think of car title loans as the bully brother of payday loans.

Although their interest rates are lower than those of payday loans, which can have APRs over 1000%, auto title loan interest rates are by no means low. The upper limit of “affordable” is generally considered an APR of 36%. The fees and cyclical borrowing associated with auto title loans make them even more expensive.

And if you can’t pay as agreed, you risk losing your vehicle. In fact, 20% of those who take out a short-term single-payment car title loan will have their cars taken back, according to a report by the Consumer Financial Protection Bureau.

Car title loans can also lead to a cycle of debt, the CFPB found. A large majority of single payment loan borrowers renew their auto title loans multiple times, incurring fees each time. Only 12% of single payment borrowers repay without renewing the loan, according to the CFPB. One-third of the remaining borrowers renewed their loans seven or more times. For a $ 1,000 loan, that would mean at least $ 1,750 in fees alone.

Does Paying Off a Title Loan Strengthen Your Credit?

In short, no: the lender does not report your payments to the credit bureaus, so paying off the loan does not create credit. If you don’t pay, the lender probably won’t send you to collection, which will hurt your credit – they may just repossess your car to pay off the debt.

Alternatives to car title loan

There are quick cash out options that cost you less – and are less risky – than a car title loan.

Before taking out an automobile title loan:

Continue with all other options: If nothing happens, speak with your creditor to see if you can have more time, develop a payment plan, or manage the short-term financial consequences of non-payment, such as late fees.

Compare the cost of taking out a loan versus not taking it: Calculate the overall cost of not having the funds for your goal, then compare it to the typical cost and interest cost of a car title loan.

If you are taking out a car title loan, cut the part in Your budget to refund it as soon as possible. This will help you manage costs and minimize the risk of your car being repossessed.

How Do Car Title Loans Work?

All loans carry risk if they are not repaid on time. One particularly troubling consequence of a car title loan, however, is if you default on your payment obligations: the lender can take your vehicle.

Before you consider getting a title loan, think about the potential potholes you will encounter if you use your vehicle as collateral to borrow money.

What is a title loan?


Definition of car title loan

An auto title loan is a short term loan that allows you to get a small amount of money in exchange for handing over the title of your vehicle to the lender. You will also have to pay significant fees to borrow money.


Let’s say you own a car worth $ 5,000 and you find yourself in an emergency that requires $ 1,000. A title loan allows you to borrow against your vehicle, so you can quickly get that $ 1,000. Just like a mortgage is against your home, a title loan uses your vehicle as collateral.

“One of the main pieces of information people need to understand about a title loan is that it uses your vehicle’s equity to secure the money you borrow,” says Bruce McClary, vice-president. president of communications at the National Foundation for Credit Counseling. .

In most cases, you must own your vehicle to be eligible for an auto title loan. The term “car” may appear in the name of the product, but these loans may also be available for motorcycles, boats and recreational vehicles.

While some lenders will offer loans if a car is still in repayment, most require the owner to hold title without any debt related to the vehicle. Consumers can typically borrow between 25 and 50 percent of the value of the car.

How does securities lending work?

Car title loans come in many forms. Some are lump sum loans, which means the borrower has to pay the full loan amount plus interest charges within a month or so. Installment loans, with similarly high APRs, can be repaid over three or six months, depending on the lender.

When applying for a car title loan, be prepared to show the lender clear title, proof of insurance, and photo ID. Some lenders ask for a second set of keys.

While securing a title loan can be easy, the convenience comes with significant costs and risks, according to Graciela Aponte-Diaz, director of federal campaigns at the Center for Responsible Lending.

“Some auto title lenders install a GPS device – dubbed a ‘kill switch’ – that can prevent the borrower’s car from starting, using this practice as a way to collect debt or facilitate foreclosure of the car,” explains Aponte-Diaz. . “In addition to being (the) primary form of transportation to work, to the doctor and elsewhere, a car is often a person’s biggest financial asset. The looming threat of losing your car is anxiety-provoking, to put it mildly.

Disadvantages of Securities Lending

The main disadvantages of title loans are a short repayment period, very high interest rates, and the potential loss of your car if you default on your payment.

“These are generally short-term loans with very tight repayment cycles,” says McClary. “If you can’t pay the loan back when it falls due, it gets carried over to another cycle with more fees. This creates a very difficult situation for people who are already struggling to repay. This is the exact definition of the debt cycle.

In addition to tight repayment terms, auto title loans have extremely high interest rates. Lenders often charge 25% each month in finance fees. On a $ 2,000 loan, you will pay an additional $ 500 in interest if the loan is paid off in 30 days. If you are behind on your payment and those interest charges add up, the loan can end up costing much more than the original sticker price.

Perhaps the biggest downside is losing your car. If you can’t pay it back, the lender can take your vehicle back. In 2016, a study by the Consumer Financial Protection Bureau found that 20 percent of those who take out title loans have their vehicles foreclosed.

Alternatives to securities lending

With such drawbacks, McClary recommends reaching out to traditional banks and credit unions to explore other, less expensive lending options.

“A lot of people might avoid traditional lenders because of assumptions about their credit,” he says. “It’s the most dangerous thing you can do. You are depriving yourself of money that you could potentially save.

Even if you don’t have a bank account, have a lower credit rating, or have struggled with bad financial decisions in the past, it’s worth investigating all of your loan alternatives. “It’s interesting how flexible these traditional lenders can be,” says McClary. “There are a lot of credit unions that are willing to work with unbanked customers. “

McClary says he rarely advises increasing credit card debt, but stresses it’s a better option than a title loan. “If you have unused credit on a credit card, you can count on it to cover your costs,” he says. “In most cases, the interest rate on your credit card will be much lower than what you get on a car title loan. And this route prevents you from potentially losing your vehicle.

At the end of the line

If you decide that a car title loan is your only option, make sure you understand the terms of the loan. Securities lenders are required to show them to you in writing before signing, and federal law requires them to be honest and upfront about the total cost of the loan. And remember, these costs are probably not worth the risk.

“Car title loans often lead people to get into debt and lose their cars,” says Aponte-Diaz. “Car title lenders often make people worse off than they were before they took out the loan.”

Griffith, Zwick: Triple-digit interest rate securities lending more dangerous during COVID-19 pandemic

By Kelly Griffith and Cynthia Zwick

As working Arizona families struggle to maintain jobs and reliable sources of income in a historically dire economy, the last thing they need is a predatory debt trap making matters worse.

A securities lender recently claimed his business was essential: charging triple-digit interest on loans that trap people in debt at the risk of losing the vehicles they depend on. It is an insult to families who are most exposed to the health impact of COVID-19 as well as financial devastation.

Arizona voters sent a clear message in 2008 that payday lenders were unwelcome to continue charging vulnerable consumers outrageous interest rates of up to 391%. Voters rejected a payday industry-sponsored voting measure by a 3 to 2 margin, which ultimately led the state to cap payday loan interest rates at 36%.

And a recent poll indicates that Arizona voters, regardless of their political party, strongly oppose these predatory practices. Seventy percent of Arizona voters support a 36% interest rate cap. Eight in 10 Americans (81%) support a ban on all high interest loans during the coronavirus crisis, with more than half (56%) doing so strongly.

Even though the recent increase in COVID-19 cases demonstrates that the virus knows no bounds on who it affects, it has become evident that this virus has a disproportionate impact on communities of color. The same goes for predatory loans. In states where payday loans are legal, stores are heavily concentrated in black and Latino communities, stripping precious wealth from places that are already in trouble.

Auto title lending stores follow the same pattern. A 2018 car title lending location mapping by Tucson’s Center for Economic Integrity found that high-cost lenders are much more likely to be located in low-income neighborhoods of color. In Arizona alone, these predatory lenders drain $ 255 million a year from our most vulnerable neighbors.

In the event of a pandemic, defending this legalized usurious loan exposes people of color to economic catastrophe on top of the worst health problems they already face.

As a society, we have a responsibility to be aware of how devastating securities lending can be for the individuals, families and communities of color who are most often the targets of unscrupulous lenders. Aside from television commercials and billboards, a small, triple-digit interest rate loan does not offer relief from financial hardship. These types of loans take a precarious financial situation and turn it into an absolute disaster.

Auto title lenders continue to file collection cases against their borrowers despite the emergency declared by Governor Ducey on March 11. In a single day last week (July 15), Checkmate Express filed 15 new cases against borrowers in the Maricopa County Court of Justice, indicating that these loans are unaffordable and borrowers are in trouble. The effects of small, high-cost loans are creating additional damage and widening health and wealth gaps, especially now in times of a pandemic.

Securities loans are predatory and designed in such a way that the borrower is trapped in a never-ending cycle of debt. The Consumer Financial Protection Bureau has found that one in five borrowers have repossessed their vehicles and that two-thirds of lender volume comes from borrowers stranded in seven or more loans.

The majority of securities lending companies in Arizona are regional or national chains, not family businesses. At least 18 approved securities lenders are headquartered outside of Arizona, representing 25% of businesses and 59% of approved sites offering loans in Arizona.

There are at least six licensed companies out of state that offer loans online without providing physical locations in Arizona, with the entire transaction handled electronically. In some cases, consumers apply for loans online, submit documents, and then take out loans with local agents.

Now more than ever, consumers need to be protected from these largely out-of-state financial predators, so that legitimate small lenders who meet Arizona’s 36% APR small consumer loan limit or less can arise in a fair and equitable market. .

Individuals and families do not need to access predatory products. What we need is for the state to deal with the issue of unemployment insurance, access to food, medical care, broadband, telehealth and other issues. urgent economic issues. And we need to strengthen consumer protections to guard against exploitation, including repealing the legal exclusion that allows triple-digit interest rate car title loans. This is the role of government during a crisis.

Arizonans are resourceful, resilient, and able to navigate just about anything. Loan programs that prey on people when they are most vulnerable on the pretext of being useful during a pandemic is a bit like a wolf parading in sheep’s clothing. Only those who profit from it agree with the trick. The rest of Arizona voters see it for what it is — wear and tear.

Editor’s Note: Kelly Griffith is the Executive Director of the Arizona Center for Economic Integrity and Cynthia Zwick is the Executive Director of Wildfire.

The benefits of securities lending

When it comes to getting financing, there are all kinds of solutions these days you can turn to. From credit cards and personal loans from High Street lenders to loans secured by your home, you can find different solutions to meet a wide range of needs and circumstances. Another option available is a title loan, which is a form of secured financing.

Title loans are loans secured against your vehicle and to be eligible you must own a vehicle in your name. Lenders can offer a loan based on the value of the vehicle, and borrowers can then borrow up to a specified percentage of that value. Many people turn to securities lending as a means of accessing quick cash, and these loans come with a range of benefits. In this article, we’ll take a look at some of the main benefits of securities lending.

What are the main advantages of securities lending?

Title lending has become increasingly popular in recent years for a number of reasons. These loans offer a range of benefits, some of which are:

Bad credit won’t hold you back

One of the things that often holds people back when it comes to getting a loan is their credit history and mark. If you have a low credit score or a damaged history, you may find that you cannot access any traditional form of financing. However, with an auto title loan, the decision is not based on your credit history or your current credit score. This makes these loans ideal for those who do not have a good credit rating.

You get the money fast

With some forms of funding, you have to wait a long time for your application to be processed. You may also need to spend time sending documents and waiting for information. Also, when you are approved, you may have another wait in front of you before you get the money. With securities lending, you can get the money you need quickly once approved, and often you can get it the same day. This is perfect for those who need the cash quickly.

The application process is simple

Another advantage of these loans is that the application process is very simple which means that you can avoid stress and hassle. If you do it online, you can process the request with speed, ease, and convenience. This can save you a lot of time and means you can do it all from the comfort and privacy of your own home.

You can keep your car

When you take out a title loan, you don’t have to give up your vehicle until the loan is paid off, which is another plus. You can continue to drive and use your vehicle as long as the loan is still secured.

Here are some of the many benefits you can expect when taking out a title loan.

Max Cash ™ Title Loans Analyzes the Challenges of the COVID-19 Effect on the Securities Lending Industry

TEMPE, Arizona., April 28, 2020 / PRNewswire / – Title Deed Lenders United States are currently suffering a decline of 69% and up to 90% in other parts of the country. Pawn shops are experiencing unprecedented growth as Americans attempt to sell property for cash.

Due to this car title loan, lenders have adapted to everything online, but you will still have to use your cell phone to take pictures. Online title lending is here to stay. “Lenders are changing to help people comply with stay-at-home orders and avoid contact,” said Fred winchar, president of Bolt Loans and A maximum of money securities lending. “Securities lenders go out of their way to lend money, but they have challenges they’ve never seen before.”

Typically, title deed lenders generate income from individuals making payments on their loan, as well as occasionally repossessing vehicles from deferred loans. However, most lenders prefer to derive the majority of their income through payments, as the repossession of the vehicle comes with other extended expenses such as storage, security or disposal of the vehicle, if applicable. . Also seeking to avoid reputational damage, most title lenders are more reluctant than ever to repossess vehicles.

People who can usually turn to title loans as a practical short-term financial emergency solution can no longer receive approval because they no longer have valid proof of income. Since the ability to repay the loan is a documented requirement for title loan approval, the spike in unemployed Americans has made it difficult for the title lending industry to accept loan applicants at its usual rate. Property title lenders want to lend. This is what they do. They are not in the business of giving money away without it coming back at some point.

Along with approval rates, loan amounts financed have also declined significantly for the securities lending industry. According to Fred winchar, President of Max Cash ™ Title Loans, “The average loan amount is now around $ 900, whereas before the average was around $ 3,500. “The current combination of low approval rates and low amounts funded has created a cash flow problem for many securities lenders, leaving them with limited income to give back to the public through additional loans. companies have closed their doors for good, many more are struggling to find qualified customers and stay afloat financially.

In response to this economic downturn in the industry, securities lenders still in business have had to find ways to adapt. Since lenders must Something rather than nothing to stay in business, small loans have become essential to sustaining the securities lending industry during this time. Some lenders also give “micro-loans”, which are as low as $ 100 and make the process all online. Other lenders have started working with banks to create a new loan product where the funding is held by the bank rather than backed by the securities lender that handles the loan.

Other auto title loan lenders have attempted to alleviate the problem by implementing a process in which the monthly payment decreases due to a continually falling interest rate. Some of these types of loans have the ability to drop to some of the lowest interest rates the securities lending industry has ever seen. In addition, some auto securities lenders only approve applicants who are extremely low risk, which is not the typical customer base typically served by the securities lending industry. These low risk, limited candidates now have the opportunity to profit from falling interest rates and potentially benefit from industry difficulties.

The securities lending industry recently adopted procedures to make doing business as secure as possible, such as online applications, processing and payments, lenders are collectively struggling to remain financially stable in these unprecedented times.

As always, Max Cash ™ Title Loans encourages you, friends, and family to stay safe and healthy by complying with the CDC’s recommendations to stay home and practice social distancing.

Stay secure, with your family of Max Cash ™ securities lending, https://www.maxcashtitleloans.com/

A maximum of money Securities lending
A maximum of money Title Loans, owned by Tradition Media Group, LLC, is a proprietary agency that uses an extensive network of lenders to help clients access securities lending services. A maximum of money Title Loans manages the processing of securities lending and the execution of sales to clients and can act as a broker for loans on a case-by-case basis.

CONTACT: Fred winchar, 1-877-958-1146, [email protected]

SOURCE Tradition Media Group

Related links

https://www.maxcashtitleloans.com

What you need to know about payday loans and auto title loans

If the coronavirus pandemic is causing you financial stress, you are not alone. Millions of Americans have lost all or part of their income because they cannot work. Government Economic Impact Payments can help, but some people may look for other ways to borrow money for a short period. They may consider options like a payday loan or a car title loan, which can be quite expensive. Here’s what you need to know.

Payday loans

A payday loan is a loan made for a short term. Sometimes only two weeks. To get a payday loan, you give the lender a personal check for the amount you want to borrow, plus any fees the lender charges you. The lender gives you cash less fees. On your next payday, you must pay the lender the amount you borrowed plus fees, in cash.

Payday loans can be very expensive. Here is an example :

  • You want to borrow $ 500. The fee is $ 75. You give the lender a check for $ 575.
  • The lender gives you $ 500 in cash. He keeps your check.
  • When it’s time to pay the lender back, often within two weeks, you pay them $ 575. The lender returns your check to you.
  • The bottom line: You paid $ 75 to borrow $ 500 for two weeks.

Car title loans

An auto title loan is also a loan made for a short period of time. They often only last 30 days. To get an auto title loan, you give the lender title to your vehicle. The lender gives you the money and keeps the title to your vehicle. When repaying the loan, you must pay the lender the amount you borrowed plus fees. Car title loans can be very expensive. Here is an example :

  • You want to borrow $ 1,000 for 30 days.
  • The fees are 25%. To borrow $ 1,000, it’s $ 250.
  • When it’s time to pay the lender in 30 days, you pay them $ 1,250.

Car title loans are also risky. If you can’t pay back the money you owe, the lender could take your vehicle away from you. He could sell it and keep the money, leaving you without transport. This video shows what can happen.

Other ways to borrow money

Payday loans and auto title loans can be very expensive. Consider other ways to borrow money, such as get a loan from a bank or a credit union.

Most loans have an annual percentage rate, or APR. The APR is how much it costs you to borrow money for a year. When you get a payday loan or cash advance, the lender should tell you the APR and the cost of the loan in dollars.

Here is a comparison of loan fee of $ 500 for one year.

What if I’m in the military?

If you are in the military, the law protects you and your dependents. The law limits the APR on many types of credit, including payday loans, auto title loans, personal loans, and credit cards, to 36%. The law also requires lenders to give you information about your rights and the cost of the loan. the the military also offers financial aid and help you manage your money.

Other options if you can’t pay your bills

  • Ask for time. Ask the companies that you owe money to if you can have more time to repay the money.
  • Acquire help. A credit counseling you may be able to help you manage your debt.
  • Apply for unemployment. Consider applying for unemployment insurance benefits from your state. Learn more and find out if you qualify on the Ministry of Labor website.

Get more tips on dealing with the financial impact of the coronavirus, including what you can do if you are:

Max Cash ™ Title Loans Work from Home program sees dramatic increase due to COVID-19

TEMPE, Arizona., April 14, 2020 / PRNewswire / – The Max Cash ™ work at home affiliate program has seen an increase of over 400% over the past month for individuals who have the opportunity to earn extra income remotely, giving them the opportunity maintain financial stability while remaining in quarantine. .

Thousands of employees who previously worked from home suddenly find themselves on leave or unemployed. Loans are essential today for countless people across the country when it comes to meeting basic needs. A $ 1,200 stimulus control may simply not be enough to effectively support an ordinary person who is responsible for real urgent living expenses on a monthly basis.

“We believe the reason for the increase is that working from home is now the new normal and people are finding ways to do it.”; noted Fred winchar, President and founder of Max Cash Title Loans, “Our affiliate program takes a lot of relief from sitting on the couch knowing that you have to compete for the job soon. You are only competing with yourself here and some affiliates are making thousands of dollars a week right now. . ”

With unemployment currently increasing at an exponential rate and stay-at-home orders being implemented in the states of the United States, earning an income from home is a crucial part of simultaneously maintaining Social Security and Personal Economic Security.

Experience working with websites is a useful attribute, but not a requirement for success with the Max Cash Title Loans work at home affiliate program. A beginner’s knowledge of social media, research and / or website design and marketing would be beneficial and yet could lead to higher loan conversions. When working with the program, Max Cash ™ offers free digital support for SEO, HTML, and other potential website components. Affiliates also receive a free landing page and phone number that tracks all inbound leads and receives an average conversion rate of 10-35% for each loan funded.

Disclosure of bank account information is also not a requirement to be a part of Max Cash Title Loans work at home affiliate program. While payment is available by direct deposit, payment is also receivable via PayPal, check, or wire transfer.

Additional information regarding the free marketing materials and other features of the Max Cash Title Loans work at home affiliate program can be found on the affiliate page of the Max Cash Title Loans ™ website at: http://www.maxcashtitleloans.com/affiliates/

Max Cash ™ invites you to share this opportunity with your sons, daughters, friends, family or anyone else in your community who could benefit from additional income from home. With the number of people seeking financing increasing daily, Max Cash ™ is rapidly seeking to help make loan products easily accessible to those who need them most.

Anyone with more questions or wishing to participate in the Max Cash Work-from-Home affiliate program can start by filling out the request form on the affiliate page, or sending their information to [email protected].

A maximum of money
A maximum of money owned by Tradition Media Group, LLC, is a proprietary agency that uses an extensive network of lenders to help clients access securities lending services. A maximum of money manages the processing of securities lending and the execution of sales to clients and may act as a broker for loans on a case-by-case basis. Tradition Media Group is the country’s largest securities lending processor.

Contact:
Patrick mcdermott
Max Cash Title Loans ™
1-877-958-1146
[email protected]

SOURCE Tradition Media Group

Related links

http://www.maxcashtitleloans.com/

Important Things To Know About San Francisco Car Title Loans

San Francisco is known to be a culturally wealthy and progressive city that has been highly acclaimed as one of the best financial centers in the United States today. Even though San Francisco is a beautiful city that boasts of fun and exhilarating destinations, it could be quite a stressful and demanding place for people living here who are increasingly faced with costly and unforeseen expenses. Above all, with the current health and economic crisis of COVID-19, you may be looking for some kind of help. According to reports, the coronavirus could trigger a severe recession or slowdown in the United States.

According to https://edition.cnn.com, auto title loans were designed for anyone looking for quick cash to pay bills, manage debts, or deal with an existing health and financial emergency.

According to https://edition.cnn.com, as stores, restaurants, factories and airlines close around the world, from Madrid and Paris to New York and San Francisco, economists constantly warn that a worldwide recession is no longer an imminent threat , it is there.

If you own a car, you can avail a very quick and easy car title loan. However, you might have to pay quite high fees or if you default on your payments, you could risk losing your vehicles. Car title loans are for people who need quick cash to pay bills, manage debts, or deal with today’s emergency.

Here are some important points to keep in mind while availing a car title loan.

To get a loan, you must own your vehicle or have equity in the car

Auto Title Lending San Francisco are supposed to be a secured loan which considers your vehicle as collateral. Auto title loans would range from $ 100 to about $ 5,500, or about 25 to 50% of the value of your vehicle. The term of the loan seems to be quite short usually only 15 to around 30 days. Even though it is called a car title loan, you can get this cash advance using your trucks or motorcycles or any other vehicle. You would need a clear title to qualify for this loan. You need to provide a photo of your car, proof of insurance, photo ID, and proof of income to qualify for this loan. If you get a car title loan approval, you will have to immediately assign the title of your car to the lender in exchange for your loan.

Car Title Loans Could Mean High Fees Or High Interest Rates

Lenders could charge almost 25% of the total loan amount each month to fund your loan. For example, to get only a 30-day loan for $ 1,000, your fee could be 25% of the amount. Therefore, you have to pay back $ 1,250 and other additional charges to pay off the car title loan at the end of the month. This would translate to an APR of over 300%. It seems pretty high. However, you simply cannot interfere with the convenience and speed with which the loan is approved and processed.

Conclusion

If you are in a crisis and cannot repay the loan, you may have to give up the car. The lender would be obligated to repossess your vehicle in such circumstances. Know your facts before you opt for this. But remember that your credit history is irrelevant and you could qualify for this loan with even a bad or no credit history.

Car Title Loans: Three Things You Should Know

Car title loans are specially designed for those who need quick cash to pay bills, face an emergency, or manage debt. If you owe or own a certain vehicle very little, an auto title loan – also known as a “quick auto loan” – is fairly easy to obtain. However, quick and easy is sometimes too good to be trusted. You will end up paying high fees for this type of loan, and losing your car is also a risk.

Before you go with a decent car title loan, here are three things you need to know.

To start

  1. If you want to get a car Miami securities lending, you must own your car or at least have equity.

In other words, an auto title loan is basically a small secured loan that often uses your car as collateral. Typically, car title loans range from $ 100 to $ 5,500, which is usually an amount equal to 25 to 50% of the value of the car. Often the loan term is short; only 15 or 30 days. And although it is known as a “car” title loan, this type of loan also applies to other vehicles, such as motorcycles and trucks.

If you want to get a car title loan, the requirements are clear title – that is, 100% ownership of the vehicle, without any liens – or some equity in your car.

Common question

What is equity?

Equity is the value of the asset, such as a house or a car, minus any debt you owe on that particular asset.

“Title pawns”, “title pledges” or “pink coupon loans” are other common names for car title loans. The term “pink slip” essentially comes from the pink paper that California car titles were once printed on.

Typically, the lender will not only want to see your car title, but also your proof of insurance, photo ID, and your car.

When you get approval for a particular car loan, you issue title to your car to your lender in exchange for that loan. It is until you pay off the loan that you will get your title back.

  1. Car title loans have high interest rates and fees

When it comes to an auto title loan, it is very common for lenders to charge around 25% of the loan amount each month to fund the loan. If you get a 30 day car title loan for around $ 1,000, for example, the fee is 25% ($ 250), and you will need to incur $ 1,250, plus any additional costs, which will pay off your loan. at the end of the month .

This translates into an APR, or annual percentage rate, of over 300%. Generally speaking, this is significantly higher than many other forms of credit, such as credit cards. If you get an auto title loan, your lender should tell you the APR and the overall cost of the loan. Indeed, you can compare this information with that of other lenders to help you find the offer that is best for you.

  1. You could lose your car if you don’t pay off your car title loan

When you get an auto title loan and you don’t pay back the specific amount you borrowed, along with all fees, your lender can roll over your loan for a new one. Once you’ve done that, you’ll add even more interest and fees to the amount you renew.

For example, you might have a loan of $ 500 and fees of $ 125. You are not able to repay the full amount after the 30 day period. You decide to pay the $ 125 fee and then transfer the original $ 500 into a new loan with a 25% fee.

When you pay off your new loan, you’ll have paid an overall cost of $ 250 in fees out of the $ 500 you originally borrowed. When you keep renewing your loan, you might find yourself in a cycle of additional charges that makes paying the lender a daunting task.

The lender could in fact take back possession of your car if you find yourself in a situation where you are unable to repay the debt. And you could end up paying even more fees to recover the vehicle, as well as the overdue amount.

Simply put, if you are unable to resolve this issue, then you will have to look for (and pay for) other means of transportation.

Why Car Title Loans Are A Bad Idea

(AOL Autos) – Cash advances are not a new concept in the brand of American capitalism. A lot of people have seen the ads with a guy barking, “Bad credit, no credit, no problem! Or, “Don’t worry about the credit, I own the bank!”

In addition to the high interest rates, these auto title loans usually include a number of fees that add up quickly.

In addition to the high interest rates, these auto title loans usually include a number of fees that add up quickly.

Anytime a guy tells you he owns the bank, run.

Even though these lenders have been around for a while, signing your car for a high interest loan has become a serious financial problem.

For those of you who are not familiar with the concept of auto title loans, allow us to explain.

Sometimes the best of us are strapped for cash; we may not have credit or bad credit (as they say in the ads), which makes it difficult for us to get small loans from a bank or some other more traditional way.

A title loan offers you money from the lender, in return you sign the title of your paid car to secure the loan. Typically, these loans are due in full 30 days later. There is no credit check and only a minimum income check.

It sounds simple enough, but borrowing in these places can lead to repossession of your car and a lot of financial problems.

Interest rate that makes credit card companies blush

Auto title loans have been lumped into the category of “predatory loans” by many consumers. Nonprofits such as the Consumer Federation of America (CFA) and the Center for Responsible Lending have published detailed reports describing some of the securities lending issues the public should be wary of.

One of the biggest issues with these loans is the interest rate. Many people dislike credit card interest rates, which average between the mid to upper teenage years for most Americans. The interest rates on car title loans make complaining about credit rates seem ridiculous.

Auto title lenders are a different category from credit card companies or banks and circumvent usury laws. Thus, title lenders are able to charge three-digit Annual Percentage Rates (APRs). Yes, three digits. It is no exaggeration to see 250% APR and more on these car tile loans and only a handful of states have passed strict laws that prohibit sky-high percentage rates.

Even if your credit card company charges you a high 25% APR interest, that’s nothing compared to car title loans. AOL Autos: the most popular used cars

Under federal law, property title lenders must disclose interest rates in annual percentage terms. If you need to get a title loan make sure they don’t just give you a monthly percentage rate quote, they have to give it to you as an APR. If they’re not clear on rates, which many may be, just know that a 25% monthly rate equals 300% APR.

Fees and interest only

In addition to the high interest rates, these auto title loans usually include a number of fees that add up quickly. These include processing fees, document fees, late fees, setup fees, and lien fees. AOL Autos: the safest cars

Sometimes there is also a roadside assistance program that borrowers can purchase for a small fee. Some lenders have even gone so far as to make roadside assistance compulsory. The cost of all of these fees can range from $ 80 to $ 115, even for a $ 500 loan.

Most of these fees are legal, except for one that lenders sometimes charge, the repossession fee. Lenders aren’t allowed to charge you for the trade-in of your vehicle, but some still do. AOL Autos: the best vans

As if high interest rates and a mountain of fees weren’t enough, lenders also offer borrowers the option of paying only interest for a set period of time. In these cases, the loans are usually put in place for a longer period (compared to the usual 30 days) and the borrower can only pay the interest on the loan.

These types of payments are called “balloon payments” where the borrower pays the interest on the loan each month and at the end of the term he still owes the full loan amount.

The CFA reported that a woman paid $ 400 per month for seven months with an interest-only payment deadline on a $ 3,000 loan. After paying $ 2,800 in interest, she still owed the original $ 3,000 by month eight. AOL Autos: The Most Popular Crossovers

Reversal and repossession

If you think that most of the people who take out these loans will pay them off in full after a month, think again. Due to the high interest rates and the fact that these lenders cater to low income borrowers, many people are not able to repay their loans within 30 days. This is called the “renewal” of the loan.

The terms of these loans are designed to keep borrowers in a cycle of indebtedness and bring customers to the brink of recovery or actual recovery. Not being able to pay off the original loan and then renew it the next month costs borrowers even more money in interest, on top of the original amount they have already borrowed. AOL Autos: Used luxury cars

Let’s talk about repossession for a minute. The CFA reported that of those polled in their 2004 study, 75% had to give title lenders a copy of their car keys. Some companies started the cars to see if they worked and took photos of the vehicle even before a customer filled out the loan application.

An Arizona-based company said it has installed GPS systems on cars so it can track cars and turn them off remotely if they don’t receive payment on time. It might be an extreme case, but these lenders take a customer’s pledge signing very seriously. If you can’t pay, they’ll come and pick you up and your car.

The concerns about repossessing your car are obvious. How do you get to work, drop the kids off at school, go shopping or go out on weekends without a car? As if those scenarios weren’t bad enough, owning a car can be some people’s biggest financial asset. If the car gets swept away, so does the money it was worth.

Some states have laws that require lenders to pay you the difference on the loan after a lender repossesses and sells your car, but some do not. It is possible to default on the loan and not get money back for your car, even if you only borrowed a few hundred dollars.

This happens because auto title loans are also over-secured. Typically, the maximum amount most lenders will give you is 25-50% of your car’s actual value. However, if you can’t pay off the loan, they might be able to sell your car and keep 100% of the profits. Some lenders will not take possession of a vehicle but instead sue the customer for the money. They then add legal fees and finance charges to the existing loan amount.

Alternatives

Many auto title lenders defend their business practices by saying that they offer loans to people who otherwise could not get financial assistance. While this may be partly true, giving away one of your most valuable assets for several hundred dollars isn’t the only option.

Some credit unions, like in North Carolina, started providing low-interest loans of around 12% APR, a fixed 31-day repayment plan (to avoid rolling over a loan), and implemented a direct deposit from the borrower’s paycheck. so that the loans are repaid in full.

Other options may be cash advances on your employer’s paychecks, cash advances on credit cards, emergency community assistance, small consumer loans, or borrowing from friends or family. family members.

If you are considering a car title loan, check out these alternative options and read the information for yourself at www.responsiblelending.org or www.consumerfed.org. If you still need to sell your car for cash, educate yourself about the decision and the possible repercussions of these types of loans.


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