If you need some quick cash and get a title loan, you might as well give your car away because of the steep interest rates, rapid repayment schedule, and shady terms
Are you strapped for cash? You aren't alone. Many people these days could use extra money for bills. To target people who need quick money, some lenders advertise short-term loans, called title loans, that use the collateral of your car. It's similar to a home equity loan, only a title loan can be much riskier and cost you a lot more money in interest charges. It can even cost you the car itself.
How Do Title Loans Work?
A title lender assesses a car's value and offers the owner a loan based upon a percentage of the assessed value, with the average loan being about $1,000. At this point you hand over your car's title in exchange for the short-term loan, which is often only thirty (30) days, most of the time without a credit check or proof of income. You are assessed an interest rate and are expected to pay off the loan at the end of the term. If you don't, Chickamauga payday loans no credit check the lender can take your car.
It may seem sensible to do a short-term title loan, but it's not, even if the interest rate is 25%. The problem is that the interest rates quoted aren't often in terms of an Annual Percentage Rate (APR). That 25% interest for a 30-day single-payment loan is about 300% in the terms of the APR we're all used to. That's significantly less interest than a typical payday loan, which is often 1,000% APR, but still much higher than a typical a credit card! (more…)