Is applying for a car title loan a good idea?

I need some extra money this month to cover my children’s back-to-school expenses. I’ve heard car title loans are a quick way to get cash, but I’m apprehensive about taking one out. Is applying for a car title loan a good idea?

Answer
Sending your kids back to school is an exciting time, but the expenses can quickly add up! Unfortunately, title loans can add even more expenses. So before you take out a title loan, make sure to weigh the pros and cons below.
A car title loan is a short-term secured loan that uses your car as collateral and quickly provides you with accessible funds. However, title loans have high interest rates and late payment fees. So only use these types of loans if you have no other alternatives.
On top of the added expense of title loans, you risk having your vehicle repossessed if you don’t repay the loan on time. If your car isn’t repossessed, the lender may allow your balance to roll over and accrue more interest and fees. This arrangement can trap you in a cycle of debt that many title loan customers can’t overcome for years.
With high-interest rates and monthly fees, the annual percentage rate(APR) of a title loan can easily reach 300%, so you may want to use an alternative such as:
  • Applying for a personal loan
  • Using a credit card
  • Applying for a payday advance loan
  • Asking friends or family for a loan
These options have lower APRs and don’t require using your car as collateral. If you have to take out a car title loan, compare rates from multiple lenders to find the best offer. Make sure you understand the total amount you have to pay back and the payment dates.
You should also look to save money in other areas such as car insurance. To cut down on car insurance costs, use the Jerry app.
After providing you with a comprehensive cross-analysis of the best policies across up to 50 providers, Jerry handles the phone calls, paperwork, and renewals for your top pick so that you don’t have to. They even cancel your old policy!
Jack Walsh
Answered on Nov 05, 2021
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