Car Title Loans Are a Money Mistake
Car Title Loan Companies
You’ve probably seen the commercials. Companies promise you a loan with no credit check and instant approval. All you have to do to receive up to $10,000 is give the company your car title, sign some papers and you walk away with cash. Sounds great, right?
Car title loans have quietly become a multi-billion dollar business over the last 10 years. They typically charge a 300 percent annual interest rate, and there is often a balloon payment that comes due within a short amount of time after you get the loan.
The non-profit group Center for Responsible Lending estimates that car-title lenders offer consumers $2 billion in loans annually, and those borrowers pay more than $4 billion in fees. The average loan is around $950, and you would pay around $2,140 in interest payments on that loan. That’s money you could be using to pay other bills, rent or food.
Hidden Fees With Car Title Loan Companies
And then there’s the hidden fees. One out of six borrowers will have to pay repossession fees in addition to the loan interest fees. Many borrowers won’t be able to make the balloon payment on time (usually within one month of the loan) and will need to take out another 300 percent interest loan in order to pay off the first. Each loan adds additional fees to be repaid, and the typical loan is renewed eight times! That means borrowers are trapped in a revolving cycle of debt that’s very difficult to solve.
Many consumer advocates say car title loans are predatory lending, and they advise that consumers stay away from the loans. But if you find yourself in a budget bind and are trapped in this cycle of debt, we may be able to help.
Call us today at 816-842-6200 to speak with an attorney. Or you can email us and schedule your free consultation.