Title Loan Tragedies

Dec 29, 1999

I would like to take the time to provide information for those of you that may consider a title loan on your vehicle. Think twice before you jump into a situation that will bite you in the rear. I have seen and heard and also researched. I have found that there are some good things about title loan companies, but most people I have spoken to have had very bad experiences with these companies.

Title loan companies offer you a loan on your car title in 15 to 30 minutes with no credit checks. All they ask is to see a pay stub, 4 personal references, and a verifiable address. That's it. Most title loans are set up as 30 day loans with interest ranging from 300% to 900% annually.

Unlike most conventional loans, there are no payment structures, and no set payment schedules. Your loan is due back in 30 days, interest plus principal (original amount borrowed). Where they catch you is here: if you cannot make the full payment (interest plus principal) your minimum payment due would be the interest that has accrued during the last 30 days. Of course, that payment doesn't even touch your principal (original borrowed amount) balance. So, your loan is good for another 30 days, and again your full balance (principal plus interest) is due. Once again you can choose to pay just the interest due.

Most people do not realize that their payments are not bringing down their balances at all. You could go on forever paying interest and never pay off the original balance you borrowed. And after months of making steady and regular payments, you get nowhere, your loan balance is still the same as it was when you originally took out the loan.

I'm not saying that title loans are not for everyone, some people have said that they rely on the title loan companies when they really need the money. It's a great place to go if you have bad credit and cannot get a loan from a bank or other loaning institution. Many people have stated that they have found that title loan companies are a great start to gaining some credit history.

I also believe this, but I also see where these companies are using ignorance against their customers by not providing proper explanation and definition during the loan processes. I urge and encourage anyone considering a title loan to make sure you are completely comfortable with the loan processes and payment structures. Ask questions, get information, know what you are signing. By doing so, you could be one of the people who benefit from the services offered at title loan companies.

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