I find that many of my clients have experience with title loans. Here, we will discuss important things to know about them.
With such high interest rates, to get your car back free and clear with regular payments high enough to pay the loan off in one years’ time, you may have to repay the amount you borrowed PLUS more than twice that amount just for interest.
In Real Terms
For a $5,000 loan paid out over one year at 300% with equal monthly payments, you could end up repaying the original $5,000 plus an additional $11,000 or more just in interest.
Many people are not able to pay more than the minimum “interest-only” payment. In that situation, just the interest payments (not counting the original $5,000 borrowed) could be $15,000. That’s three times the amount borrowed – FOR JUST ONE YEAR!
These loans, which are secured by a lien on your vehicle, are shocking. I have seen people who have paid on these notes for years and still owe just as much as they initially borrowed, or sometimes even more.