Consider The Risks And Alternative Of Car Title Loans

Car title loans will enable you to get quick cash that may range anywhere from $100 and $10,000 but for that you will have to put your vehicle in the line of fire as collateral. You can avail such a loan using any type of motor vehicle such as your car, RV, truck or SUV. However, there are a few requirements to avail such a loan and these are:

  • It is required that your car title is free
  • It is in running and a resalable condition
  • You will get about fifty percent of the present market value of your car
  • It can be expensive carrying a high Annual Percentage Rate ranging from 260% to 300% even
  • It may also come with hefty fees.

It is easy to avail a car title loan as the document requirements are minimal and the processing is fast. However, there are several risks involved in it. It is for this reason you should all at the other alternatives are well before you finally decide to take it.

Important facts to know

Car title loans can be an expensive as well as a potential alternative to get the financial help you need that can you in the vicious cycle of debt. The most terrifying fact is that if you fail to repay this type of secured loan, then the lender can confiscate and resell your car to get their money back.

Therefore, before you apply for a car title loan from or any other lender, be considerate when you have a cash crunch and consider the likely better options.

Ideally, there are two types of car title loans:

  • Singlepayment loans: In this type of loan you will have to repay the full amount in one lump sumusually within 30 days after you take out the loan. This loan type will have an average APR of about 300%.
  • Installment loans: You can also make multiple payments that may go up to three or six months. This type of car title loans usually have a slightly lower APR.

Usually, the lenders will have fewer requirements as everything is based on your car and its value. They may not even need a proof of income or check your credit because they will repossess and sell your car if you do not repay, which is one of the most significant risks of car title loans.

Alternatives to car title loan

There are a few alternatives to car title loans that can be an equally good option to get quick cash but with less risk and cost. These are:

  • Ask friends and family
  • Help from local charities, nonprofits, and religious organizations
  • Payday alternative loan from a credit union
  • Paycheck advance from your employer or
  • Pawnshop loan.

However, compare the cost of each loan before taking it out including the overall and typical cost in fees, interests and non-payment consequences.

It is prudent to create a budget to pay back your loan, car title or any other, so that your collateral is not repossessed.

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