Auto Title Loans When you drive by one of these lending institutions that will take the title to a car as collateral for a loan where the borrower may pay up to 300% interest, you’re happy you don’t have to borrow money under these terms. Don’t kid yourself. With the middle class disappearing as a formidable contributor to America’s economy, you had better take notice, start to understand the economic problems of this country and get off your butt or you may end up in the Title Loan arena.
The ads of the title loan companies seem to describe such an easy solution to the borrower’s problems, that is, without giving up possession of anything but the title to the borrower’s car, how can the borrower get hurt?
Well, think again. What happens if the borrower defaults? The lender takes possession of the car. The borrower can’t get to work, can’t take children to school and if sickness hits the borrower’s family, the family is out of luck.
You can understand the ramifications of this type of outrageously expensive loan as well as I can. I tell you about these horrible life-destroying loan arrangements to let you know I feel that every one of these oppressive loans adversely affects each one of us.
These are some of the specific terms and conditions that a borrower faces when borrowing money from title loan companies:
1. Title loans are designed for a person with bad credit or no credit to obtain a quick fix to a financial problem. They are not intended to fix long-term problems.
2. In exchange for the monies borrowed, the owner gives up free and clear title to the vehicle. THE OWNER CAN DRIVE THE VEHICLE AS LONG AS THE PAYMENTS ARE CURRENT.
3. If the owner doesn’t have clear title but only owes a small amount, many lenders will pay off the loan and combine it with the other loan proceeds.
4. MOST TITLE LOANS ARE FOR A PERIOD OF 30 DAYS AND CAN BE RENEWED SEVERAL TIMES.
5. MOST LOANS CAN BE APPLIED FOR, OBTAINED AND COMPLETED IN LESS THAN 30 MINUTES WITHOUT A VERIFICATION OF CREDIT. SOME LENDERS BOAST THEY CAN MAKE THE DEAL IN 15 MINUTES OR LESS.
6. Some states have caps on the amounts that can be borrowed. The amount borrowed is usually based upon 50% of the Kelly Blue Book resale value.
7. ONLY ABOUT ONE THIRD OF THE STATES ALLOWS TITLE LOANS BUT WHERE STATES DO, THE PROFITS ARE OUTRAGEOUSLY HIGH. MOST STATES HAVE NO CAPS ON INTEREST RATES.
8. When companies advertise low interest rates of 9.99% over the period of the loan, the actual yearly interest rate is over 120%. The interest rate charged would make even a credit card company envious.
In Nevada, some of the lending rules are as follows:
1. The lender must give the borrower a written and detailed loan agreement.
2. NEVADA HAS NO CAP ON THE INTEREST RATE THAT IS CHARGED. LENDERS CAN CHARGE ANY AMOUNT THEY CHOOSE.
3. Loans are for 30 days and can be renewed up to six times.
4. In order to obtain the loan, the owner must have free and clear title.