Doug's Credit Center Blog

Auto Title Loans can be Dangerous

Posted on by Andrew


Finding yourself in a desperate situation without cash can be quite frightening. Maybe you already have a low credit score, and you’re worried about not having enough money to pay the bill. Perhaps the rent is due, and you don’t have the funds for it. Auto title loans as an alternative source of quick cash are one possibility.

What These Loans Means

Hearing auto title loans as an alternative source of quick cash might be something completely and totally new to you but don’t confuse these loans with your traditional used auto financing. Essentially, you are using the title of your car as collateral for a cash loan. Obviously, this can be a bit risky if you are unsure as to when you will have the funds to pay back the loan. Once you pay the full amount of the loan back plus interest, you will receive the title to your car back.

The Loan Amounts

Generally, when it comes to car title loans, you are not able to take out huge sums of money. You should look into local laws governing the exact rules in your area. However, it’s usually not possible to take out more than several thousand dollars with these loans. Of course, this can be a huge and significant amount of money that can really help you out.

The Consequences

When you take out such a loan, you need to be aware of the consequences that await you if you do not pay it back. First of all, you are going to be without the title of your car, and that’s a major problem. Furthermore, if the loan continues to go unpaid, the provider can actually take possession of your vehicle.

Limitations

Certain limitations exist to these types of loans. For example, car title loans are available in less than half of all the states in the country. If your car title is in another person’s name, as is the case for a portion of the population, this situation is not going to work without the other individual being involved. There can not be any unpaid car loans or other liens on the vehicle. Lastly, these types of loans tend to have very high interest rates.

When you really need money quickly, auto title loans can be a plan that will help you. Remember to consider

  • The meaning of these loans
  • The possible amount of these loans
  • Consequences of not paying them back
  • Limitations associated with these loans

Taking all of this information into consideration will help you to develop a plan that works well for you.


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