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Online Title Loans – The Worst Loans on Earth

7 December 2018 No Comment

An online title loan may be the worst way to borrow money when you are desperately in need. It is generally considered a last-resort loan due to the number of fees and high-interest rates that comes with the loan. However, there are more reasons why you should stay away from these types of loans. In this post, we will discuss a few of those reasons.

Online Title Loans Are Expensive

It is true that borrowing from these title loan companies will carry a huge financial burden. These lenders are different from banks in the sense that they are not regulated by a government entity. This is the main reason why their APRs are so high. Interest rates on these loans can raise high up to three digits. Furthermore, only some states have succeeded in passing laws to cap the rate of interest that can be charge by title lenders.

Besides the interest rate, the number of fees is excessive up to the point that it can rise up to twenty-percent of the loan amount. This includes the processing fees, origination fees, document fees, late fees as well as lien fees.

Some states like Montana have started following strict regulations by not allowing excessive APR. The APR is limited to 36%, however, people have voted not to allow title loans. The roadside assistance is sometimes made obligatory by the company and these fees seem unnecessary but for extra profit. The system is more like penetrating into debt rather than taking a loan for getting out.

You May Be Dealing With Sketchy Lenders

The problem with getting a loan online is that a borrower will not have the opportunity to meet with the lender face-to-face. This allows sketchy lenders all over the world to portray themselves with an air of legitimacy on the web. According to a recent study on online title loans, many would-be lenders are nothing more than affiliate sites that collect your information.

You Risk Your Car Being Repossessed

When a borrower cannot pay the loan on the due date, the lender takes over the car title from the owner. This process of repossession affects further along with the additional fees the borrower has to pay. This leads to huge financial crises and doubles the amount of debt. In addition, the lender may allow a rollover; this means that the person has the opportunity to borrow money for another 30 days with a fee. This is again a bad choice as the loan is a short-term loan making it more stressing to pay off the fees and interests. Most people struggle to pay off the interests and fees because of the short-term length.

Alternative Ways of Getting Money

Besides a title loan, it is a better choice firsthand to try other loan services like the bank or a credit union company. Another helpful way would be borrowing from friends and family who knows they might lend without interest. There may be other alternatives to getting money like advance cash on credit cards, emergency community support, and small consumer loans.

Online title loans are like a balloon loan system. Borrowers must pay regular loans and at the end of the term, one should pay the full remaining balance of the loan. Before applying for a title loan, you should think about the consequences coming in the future. It, however, depends on individuals and their reason behind choosing for a vehicle collateral loan.

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