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Are Auto Title Loans Really Worth It?
from: Loan & Credit FactsOne thing that many people are beginning to question is whether or not auto title loans are actually worth the time and hassle, as you must have certain things in order to get the loan. In fact, not only do you need to have certain information but your car alone must be worth a certain amount, along with having a clear title.
When it comes to getting auto title loans, it is usually only those that absolutely need the money that get auto title loans. In fact, most people have never even heard of auto title loans.
An auto title loan is when someone will take out a loan while putting their cleared auto title for collateral; therefore, if the people do not make the payments on the loan the car/vehicle will then become property of the lender.
When it comes to getting an auto title loan, not all financial institutions do those types of loans. In fact, the only place that openly does auto title loans are authorized finance dealers.
Just because they are known an authorized dealers does not mean that you are getting a good deal on the loan, as in most cases you aren not. When you go to an authorized finance dealer, you will be taking a high (very high) short term loan out on your vehicle title.
When it comes to the short term basis, it is usually no longer than 30 days; however, that also depends on how much the person wants to pay. Also, not only are the authorized dealers able to give you auto title loans but they probably do payroll advances, as well.
One thing that many people do not actually look at until they absolutely need to is the amount of interest that is imposed. Even though they know the interest rate is high, most people are still surprised when they see how much it comes out to in terms of dollars.
On an average auto title loan that is given, the interest rate is 25% each month. However, when you calculate that over a year, the interest rate averages out to be 300%, which is astronomical!
Another thing that many people realize is that auto title lenders tend to focus on people that have bad credit, low incomes, those in the military as well as those that are elderly. If you are one of those types of people, the best thing that you can do for yourself is to stay clear, as it is very easy to get taken advantage of.
If you are asking yourself if auto title loans are worth getting, there is no true way of answering unless you have dealt with an auto title lender. Somtimes personal situations may warrant an auto title loan. For the most part, we suggest you steer clear.
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