Getting a title loan is an appealing way to get cash fast because it is quick and convenient. However, you should know as much as you can about this process before turning to it.
How Do They Work?
They work based on the equity you have in your car. You’ll need to own your car’s title without any loans out on it for this to work.
How Much Money Can You Borrow?
Typically, the maximum borrow range is between 25 and 50 percent of your car’s value. While this is generally a way for you to get small amounts of cash, some lenders will loan you up to $10,000.
Are There Risks?
When you need cash immediately, title loans Mississippi can seem like a good option. However, they can be risky for your credit score and put you in financial danger.
Are They Expensive?
Generally worse than payday loans, title loans can have interest APRs of up to 300 percent. That means you are going to be paying a lot each month. You’ll also have to pay additional fees on top of this.
Do They Cause Debt Cycles?
If you can’t fully pay back your loan at the end of the cycle, your lender will likely renew it. This will add more fees and interest to what you already owe, which can trap you in a debt cycle.
Is Your Car in Danger of Repossession?
Those who can’t make their full loan payments at the end of the term can lose their vehicle. However, the lenders would rather have your money, so this seldom happens.
While these are a great way to get cash fast, they can also be risky. Generally, you’ll have to pay steep interest rates and high fees. However, it is a good option if you need a last resort.