Are car title loans safe?

Are car title loans a safe option to make fast money? I need some quick cash to buy a new fridge, but I’m a little worried about taking out a title loan. I've heard the interest rates can be really high.

Unfortunately, you’re right to be concerned. Car title loans aren’t necessarily unsafe, but they can definitely be risky for a few different reasons:
  • Car title loans can have very high APRs, sometimes well over 100%.
  • They typically have relatively short repayment period, often between one and six months. That means your monthly payments will be high, even before you account for interest.
  • Title loans hold your car as collateral. If you can’t pay off the high monthly rate, your lender has the right to repossess your car.
If you’re looking for quick cash, consider your alternatives. Credit unions offer loans with lower interest and more flexible terms. Your credit card company may also have loans or credit advances for much better terms than you’d get on a title loan.
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Liz Jenson
Answered on Nov 08, 2021

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