Are you in the urge to finally having that Porsche red sports car that you want to have all these years? But then, your current financial situation could not possibly permit you to be able to pay it in cash since you have other things to pay with your existing salary. There are the school dues of your children, the utilities like the monthly electric bill, and you're still paying for the loan of your house. You have been asking and looking around for someone or some entity to provide you with a car loan. One of the things that you've found out is that you can actually avail of an auto title loan. But, wait, hold your horses - before you go to this lending company and get that loan, you may want to know about car title loans.
What Is an Auto Title Loan?
An auto title loan is an easy way to having that dream car. It requires only a minimal qualification: all you need to have is a job. The catch is that this loan is high risk and has unbelievably high interest rate.
Why Is It So?
It is being offered as a small emergency loan, so lenders give skyrocket interest rates. An average annual interest rate for this loan is triple digit or up to 300 percent interest rate every year. Because of lax state laws, lenders could also repossess your car if you could not pay your loan at an agreed date. Since they have duplicate keys of your car, lenders could haul your car from your own home late at night. The period of time given to customers is also very short. As what the CFA, or the Consumer Federation of America, had reported, some lenders who give loans of up to $2,500 would demand for repayment in just 30 days. If these would not be paid within this period, the customers would be paying more monthly interest rate of about 25 percent. Then it would become a mean cycle of payment of ballooning rates until the customers have the balance that is relatively high that they could not possibly pay them anymore.
In the end, they would have to agree for their cars to be taken away. After repossession, some lenders could sell your car and take all the proceeds. It would be just like renting the car with high charges.
The Power of the Lending Companies
The lending companies had been able to get around with all of these things because of the slack laws that authorize them. This industry is supporting the campaigns of politicians and had been able to lobby for laws that would give them much freedom to prey upon the customers. The recent of it is lobbying for state laws to legalize title loans without rate caps and adequate protection. This would lessen the control of the government for higher rates and unfair provisions that would definitely be advantageous to the lenders.
Knowing all of these things, it would not be wise to have an auto title loan. Look for better options for you to have that dream car of yours.
