How To Stay Safe With Title Loans

Title loans are risky business, and are normally a bad choice. However, people still use them, so it's important to discuss how they should be used, and what to watch out for when applying for them.

In case you don't already know, the consequences for not paying your title loan back are that your car is going to be repossessed and sold, so it's extremely important that you do everything that you can to make sure that you use these loans responsibly! For a more in depth explanation of this, this site has a great break down.

There are a lot of different ways to get fast cash, so be sure to weigh out your options. There are links at the bottom of this Hub that will help you figure out what else you can do to make money fast.

How bad do you need your car?  Image courtesy of boring vanner via flickr.
How bad do you need your car? Image courtesy of boring vanner via flickr.

How Do Title Loans Work?

A title loan is a secured loans that uses the value of your car to get you paid.  Most lenders will allow you to borrow up to 50% of your car's value (which causes major problems, but more on that in a bit). 

To get approved you're going to need a few things.  First, you need a car (duh) that has been completely paid off, you also need the title that goes with it, and an extra key.  Most of the time your car is also going to have the car insured.

The lender will then evaluate the value of your car, and present you a loan offer from there.  Keep in mind that you don't have to borrow everything that they offer!  Borrowing less is a very smart idea because it saves you money, and takes some of the heat off of having to pay it back.

Title loans are generally repaid 30 days from the day you accept the money, but each lender will have their own specific terms.

Why So Many People Get Screwed With Title Loans

What do you think is going to happen to the average person when they need to borrow $500, but are offered $2000 for their loan?  Are they going to do the responsible thing when faced with a big chunk of cash?  Probably not!  They're going to take the money and run!

This is why so many people have problems with these loans.  Unlike a payday loan, title loans are much larger and your income doesn't play as much a role in the approval process.

Many title loan lenders know this, and have no problems lending you way more cash than you have a decent shot at paying back.  They are going to make more money when you either default on the loan and they get your car, or you request an extension.

The key here is to not borrow a dollar more than you need to!

How To Stay Safe With A Title Loan

Before applying for a loan, make sure that there aren't any other options out there.  Not getting a loan like this is the best way to make sure that you don't have any problems with them!

If you're dead set on getting a title lend you have to first come up with a precise dollar amount that you need to borrow.  Without that you are going to borrow way to much money, and struggle to pay it back.  Calculate your bills, expenses, or whatever you need this money for out as accurately as possible.

The second that you accept your loan, you have to go on the hunt for more money.  This means working overtime, picking up odd jobs, selling some of your stuff, as well as reducing your living expenses to as close to zero as possible.  Doing all of this will absorb the shock of paying the loan back since you'll have some extra money in the bank.

Should You Apply?

After reading through this hub, I hope that you understand the steep consequences and risks involved with a title loan.  If you do apply for a loan, don't take it lightly.  Your car is your lifeline to the world, and if you're flat broke and don't have a car because you screwed up on your title loan, life will be miserable!

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Comments 1 comment

salina 6 years ago

what if a person dies while the car is in reposession? Is the loan forgiven or can the family pay off the loan still and take the car?

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