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What are the pros and cons of car title loans?
I'm thinking of taking out a car title loan. What are the pros and cons I need to consider before I do so?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“The upside to car title loans is that they give you the money you need (for bills or emergencies) quickly, even if you have bad credit. And unlike traditional loans, you usually get the money within a few hours of applying.
However, title loan companies notoriously have sky-high interest rates and excessive fees. In addition, if you can’t pay the loan back in 30 days, you are often at risk of having your vehicle repossessed. The title loan company may also convince you to take out a new loan to cover your title loan, while also charging astronomical interest rates and hidden fees.
Because of the unsavory practices of these companies, you should be wary of taking out a car title loan. Doing so can get you trapped in a continual web of debt that many people never get out of.
So if you need money, consider borrowing it from relatives or asking your employer for paid overtime or to front you the money. Although you may have to swallow your pride momentarily, the potential for disaster lessens considerably.
“
View full answer
- Gregory R.
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