Payday loans and title loans have a notoriously bad rap; however, there are hundreds of companies that provide such loans still in business which proves that they are obviously in high demand. With the economy strained and many families now living on one or a small fixed income, many don’t have room for error in their finances. If the washer goes out or the car breaks down, many people have no where to turn.
So where do many of these individuals turn when they need money fast? Payday and automobile title loans. These types of loans are good when you have no other options for payment, but there are a few things any one should consider before securing one of these types of loans.
Auto title loans have incredibly high interest rates, and for every $1,000 borrowed you can expect to pay an additional $150-$200. Even credit cards don’t have that high of interest rates. So if you have no other option but a title loan, make sure that you factor in the interest in the loan total – or you may find yourself with a loan higher than what you can afford to pay.
Anyone interested in a title loan also needs to be aware that the loan will have to be paid in full in 30 days. If you take out a title loan, you need to make sure that you are going to be able to pay that amount off in a month’s time. If you won’t be able to, your interest rate can go even higher, and you run the risk of losing your car altogether.
If you have a friend or family member who could loan you the money instead, it may be a better option to borrow from them. While most people don’t like mixing friends and money, allowing a close friend or family member to help you can save you a few hundred dollars which may prevent you from becoming a chronic user of title loans.
Title loans are a good option for those who need cash fast and know that they will be able to repay the amount in 30 days or less. However, if you find yourself in constant financial instability, taking out a title loan may only exacerbate your situation.
Guest post by Jess from 43a