Why You Should Never Get a Car Title Loan

Many people have financial difficulties every once in a while. You could get sick, forcing you to reduce your hours at work. Reduced hours results in reduced pay. The rent is due, and you don’t have enough money because of your short paycheck. You may need to find some way to borrow the money in order to pay the rent. You may have seen commercials on television promising to give a loan to anybody that owns a vehicle. These commercials often show happy people waving fistfuls of cash. Don’t be fooled: these car title loans that are being advertised are bad news. Run very far away from them.

You Risk Repossession

Whenever someone takes out a car title loan, they are risking having their car repossessed. Although nobody plans on not paying back a car title loan, sometimes things happen. The money you had set aside to pay back the loan is needed to see your dying grandmother. Your child gets sick and you have to buy medicine. The larger the loan you take out from a car title lender, the more interest you will have to pay back. However, it would be a shame to take out a small loan and lose your car over a tiny amount. If you lost your car, how would you get to work? How would you run errands? Car title loans have a large element of risk to them, and only have a small reward.

Fees and Intrusiveness

Car title loan stores often include several fees when you apply for your loan, and sometimes go over the line when it comes to intrusiveness. These fees come on top of the interest rate that you have to pay, and may include roadside assistance that you don’t want or need. Although illegal in many places, some car title lenders even charge a repossession fee. Car title lenders can also be intrusive. They may get a copy of your keys and make sure your car starts, even before you apply for the loan. One lender in Arizona even started installing GPS in the vehicles that were being used as collateral, and if the borrowers didn’t pay on time, they would be able to shut off the car remotely. Although this practice may not have reached a lender near you yet, that doesn’t mean they won’t begin this practice in the future.

Alternatives to Title Loans

There are alternatives to car title loans. You may be able to borrow money from your family or a local credit union. Getting a paycheck advance is another alternative to signing your car’s title over. Although payday lenders charge similar interest rates, you don’t have to risk your car to get the loan. All you need is a job and a checking account. The next time you run into a cash emergency and are tempted by commercials of people flashing cash, ask yourself whether a loan is worth risking your car over. Then find an alternative source of funding, like a paycheck advance, instead.