Facts About Car Title Loans

Car title loans are short-term loans that you could get by putting up your vehicle as collateral. This isthe way it works: you obtain the loan money, and in exchange, deposit your car title and a duplicategroup of your vehicle keys with the lender.

You can recover these by repaying the loan amount with interest within a stipulated repaymentperiod. If you cannot do so, the lender sells your vehicle to obtain back his money.

Car title loans are advertised as an easy way to raise money. Which does seem true considering theconvenient loan process involved. You make an application for car title loans by just filling out andsubmitting a form, either online or at the loan agent's office. The task for approval is simple so youreceive the money within 24 hours equally.

The reality, however, is that motor car title loans could spell financial disaster for you. Read below todiscover more regarding the three main risks attached to these 'easy' loans.

1. High interest: Car title loans usually carry an extremely high annual rate of interest-anywherebetween 36 to 300 percent. This makes car title loans an exorbitant option for borrowing money.

2. Escalating rates: In car title loans, if you don't pay back the amount of money in the right timespecified, the repayment date is extended; that is known as a rollover. The catch is that every righttime this happens, the interest also increases. Thus, the quantity you borrowed from keepsescalating, resulting in a vicious debt trap that it may be found by you difficult to obtain out of.

3. Heavy penalty: In the event of default in payment, the lender is entitled to sell your vehicle andkeep the money. This is worse than you think, because the amount you received as loan will alwaysbe less than the specific value of your car. The lender shall keep the entire amount he gets for thecar, even if it really is much more than your balance.

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