Title Loan

A title loan is a fast cash opportunity for financially strapped consumers who are desperate for money and willing to risk the property they own to qualify for quick money. Typically, title loans are intended to be short-term loans that can be paid off within thirty days, maybe with the next paycheck. They are contracts secured by the "title", a paper which proves the right to possess property, like a car. When securing a title loan with this proof of ownership, it guarantees the lender that, if there is default, the lender can be the new owner of the property. They can keep, repossess, and even sell the car without the owner's permission, which is why this course of action is risky. Even if the car is more valuable than the loan, it still means that the lender will have the keys.

If it still seems worth the risk, there are safeguards that anyone should employ. First, if someone is a cash strapped consumer, they may be lured in to get money that seems almost free. However, title loans come with interest that compounds at the steepest rate allowed, even increasing by one third or more yearly. That person must be very clear about the interest which accrues in a title loan, even to the point of calculating the amount to the penny. Second, each state has laws which regulate title loans, as well as the credibility of lenders. The "amount financed" is the amount the person is borrowing. The "interest rate" is the percentage of extra money that will be paid to the lender for the privilege of using his quick cash. Look for the worst case scenario: what will happen if the title loan cannot be paid?

For instance, the contract should say exactly what the lender will do with the property. Either get the facts needed from the lender or the state department of Financial Services, which protects people from title loans that seem more like piracy. This can be the beginning of a financial nightmare, which is why the Bible warns about debt saying "If thou hast nothing to pay, why should he take away thy bed from under thee?" (Proverbs 22:27) Knowing all the details of a potential fix to financial problems is the best way to avoid future problems caused by this action. Praying for God to make clear the actions to be taken is the first and foremost concentration to make.

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