Why Car Title Loans Are A Rip-Off

Millions of people that are out of work or are struggling financially often turn to a car title loan company for help. Sadly, many of these people will fall victim to car title loan companies. These companies offer quick cash for the title to your vehicle. There are several reasons why car title loans are a rip-off.

Essentially, the companies provide you with a high interest loan and your vehicle title is the collateral for the loan. A car title loan company will offer you a loan without a credit check. This is attractive to people that have bad credit. The loan term is usually 30 or 60 days. Most consumers feel they can pay the loan back within the term. Many people are shocked when they realize the $350 they borrowed escalates to double that amount. The employees are carefully trained to sell you these loans and they rarely disclose the total amount you are going to have to pay.

Car title loan companies are under severe scrutiny in many states. The reason is these companies can charge any interest rate they choose on the money you borrow. One company that was recently reported in the news by the CNN network, reportedly charged customers an interest rate of 250 percent.

The average rate of interest offered by car title loan companies is around 35 percent. If you default on your loan, you will be charged exorbitant fees and additional interest charges to keep get your car. Unfortunately, many consumers end up losing their car. This always leaves consumers in a worse financial situation than they were in before they accepted a loan.

Many states are taking action against car title loan companies and are limiting the amount of interest these companies can charge. However, the interest rates and fees are ridiculous. Much of the information regarding the high fees and interest are buried in the fine print of the loan agreement. Very few consumers read the agreement before signing.

If you are in need of quick cash, getting a loan from a car title loan company is not the answer. You will pay at least double the amount of money you borrow. While most companies will extend your term, you will be in major debt to the company. You have seen many commercials on television portraying happy and satisfied customers. The reality is few consumers are happy once they realize how much it is going to cost to get their car title back.

Just say no to car title loans!