An unexpected emergency expense popped up and you need money to cover it until you get paid again. If you’ve thought about resorting to a car title loan to get the cash, think again.
These loans have many bad terms attached to them, including 250% APR’s, 30-day repayment periods, ridiculously high loan fees and the worst, if you don’t repay the loan, your car can get repossessed.
Ads and commercials claiming “no credit, bad credit, we will approve you” or “I own the bank” try to calm borrowers’ fears that they won’t get approved for a loan anywhere else. AOL Autos says, “any time some guy is telling you he owns the bank, run.”
Evergreen Finance is an auto title loan company with four locations in northern Arizona.
Here’s how a car title loan works. A car title loan offers you cash from the lender, in return you sign over the title of your paid-for car to secure the loan. Typically, these loans are due back in full 30 days later. There’s no credit check and only minimal income verification.
But borrowers need to beware of things like balloon payments on this kind of loan as well. The Consumer Federation of America reported that one woman paid $400 a month for seven months on an interest-only payment term for a $3,000 loan. After paying $2,800 in interest, she still owed the original $3,000 in the eighth month.
What if you can’t pay the loan off in 30 days and they go to repossess your car? In most cases, the lender will require you to give them a copy of your car keys when you sign the loan.
A company based in Arizona said they have GPS systems installed on the cars so they can track the cars and shut them off remotely if they don’t receive payment on time. If you can’t pay, they will come looking for you and your car.
Click here to read the full story from AOL Autos to get more information on why car title loans are a bad idea.
Photo via evergreentitleloans.com.