Auto Title Debt
Auto title loans allow borrowers use their vehicles as collateral for quick cash. The lender holds the title to the vehicle until the loan is repaid. The loan amounts are far less than the value of the vehicles. If a person does not follow the terms of the loan, he can lose his vehicle.
The typical auto title loan is about $700 and the typical annual percentage rate is 300 percent. A recent study found that 1 out of every 5 borrowers had her vehicle seized by the lender.
In many ways, an auto title loan is even more problematic than a payday loan. Why? Because you can lose your vehicle.
If you have auto title loan debt, pay it off as fast as you can to avoid losing your car.
- Borrow from a family member or friend to pay off the loan. You will still owe the money, but will not have to pay the renewal fee every two weeks. And you don’t risk losing your vehicle. Be sure to pay this loan back. Not paying back a loan from a family member or friend can cost you the relationship.
- Use your tax refund to pay off the loan.
- Explore an installment loan. While an installment loan is likely to cost you just as much as a lump sum auto title loan, the smaller payments over many weeks or months may be more manageable.
- If you can, take a small loan from a credit union or bank to pay off the auto title loan debt. You may even consider a cash advance from a credit card if you have one.
If you rely on your car to get to and from your job and get your children where they need to go it’s important to pay off your auto title loan as soon as possible.