USA Today recently published this statement, “Auto title loans are a form of predatory lending. Don’t let these lenders make you their prey.”
Wow, talk about where the rubber meet the road. But, let’s say you’re strapped for cash and a title loan seems to be a good approach to get the loan you need. After all you have a free and clear title and you might be desperate for cash to get you out of a bind. Don’t do it! You’ll have to pay unusually high interest. Title Pawn and title loan companies “target consumers who are desperate for cash and therefore willing to pay ridiculously high prices to get it,” says USA Today.
How do title pawns work?
Simply put, your free and clear title is property you pledge to insure that you repay the loan. The lender then has the right to take whatever property is listed if you default on the pawn or loan. You’ll get the cash you need but you’re charged a high interest rate and a high payment which then can make you more susceptible to defaulting on the loan. So, it’s a really tricky scenario.
What is the cost of a title pawn loan?
According to The Motley Fool, a financial advice company for investors, “Auto title loan lenders charge an average of 25% per month in interest on the loan. That’s an annual percentage rate (APR) of 300%! And you can expect an auto title loan to include a variety of fees on top of the exorbitant interest. In other words, if you were to take out a $1,000 auto title loan and repay it 30 days later, you’d owe the lender $1,250, plus who knows how much in fees.” You can do the math! And finally, “steer clear of “rollover” offers. Title lenders will often allow you to pay just the interest on your loan and roll over the principal to a new loan, but doing so will trap you in an endless cycle of escalating fees and interest.”
What are the alternatives to title pawns and title loans?
Even if you have poor credit or slow credit … there is an answer … 1800NewRate is a consumer loan company that could help you get out of a title pawn trap, or help you even before you get into a ridiculous title pawn loan. It’s key to make the call to 1-800-New Rate or visit their web site at 1800NewRate.com and get all of your options. 1-800-New Rate has served thousands of customers in Georgia, Alabama, and South Carolina and helped people get free of title loans, get their bills paid, and begin to improve their credit score. Call today!
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