If you need to pawn a title, make sure you read the contract. A contract will explain the details, terms and conditions of the loan. The title pawn is a fast way for you to get cash. You give the lender the title to your property, and the lender give you money. Moreover, you get a small amount of cash, and you have to repay the money in a short period.
Some writers are saying this is a dangerous loan, and it is worst than a pay day loan. States are taking steps to protect consumers from title loans. Here are the three critical things you need to know about title pawn loans. The annual percentage rate can be very high. You might not be able to repay the loan. The lender can take your property.
The Annual Percentage Rate
First, the annual percentage rate on title loans can reach 300 percent. Try to find an alternative method because this type of loan is very difficult to repay. Contact a credit union, bank, friend or relative for a loan. For example, you borrow $1,000 for 30 days at 25%, on day 30, you will owe the vendor $1,250.00. Some title loans are impossible to repay. Make sure you borrow what you can afford to repay within the 30 days.
Your Ability to Repay
Next, please keep in mind your ability to repay the loan. The title loan is worse than the pay day loan. Think seriously about how you will repay the loan because the lender will take your car, boat, motorcycle or any other property. You might get sick or lose your job. The lender will add fees and you will have to “roll the loan over” for another 30 days. For instance, some customers have lost their cars, and could not drive to work, school or make it to the doctor’s office.
Repossession and Fees
Then, the lender can repossess your property and charge you fees. You should know the total cost of the loan before you sign the contract. However, you might not know the total cost for repossessing your property. This is how the lender make a big profit. You borrow $1,000. Your car is worth $8,000. You fail to repay the loan because you lose your job. The lender repossess your car and sell it for $9,000. Although you borrowed $1,000, in some states, the lender can keep all the money.
Finally, you should definitely consider the interest rate, your ability to repay the loan, and the fees. You can put yourself in a bad financial position by obtaining this kind loan. On the other hand, some consumers use title loans to help pay the bills.