We’ve all seen and heard the upbeat commercials where people are smiling and happy and talk about how much a title loan helped them, but it’s like the old saying, “if it sounds too good to be true, it probably isn’t true!” When you find yourself in a financial bind, however, the bright and flashy signs advertising instant cash is very tempting.
One in Five Title Loan Borrowers Lose Their Car Anyway
The Consumer Financial Protection Bureau (CFPB) recently issued a report finding that one in five people who take out a single payment auto title loan end up losing their automobile to the title loan lender for non-payment. Title loans carry a high interest rate and a short repayment period, usually 30 days. Most borrowers cannot afford to pay the title loan back in a lump sum. If not addressed, the title loan lender will repossess the automobile. This is extremely hard for most borrowers as it limits them from getting to work. If the borrower can’t get to work, it can then lead to problems and issues with other creditors. A title loan debt can be a vicious, recurrent cycle.
Four of Five Borrowers Fail to Repay Loan in Single Payment
What generally happens to most borrowers is just that, a vicious cycle of renewing the loan every month in order to keep their automobile. The CFPB study found that four out of five borrowers fail to repay the loan in a single payment. Many of these borrowers are never able to get their title back and continue paying exorbitant interest all while the automobile continues to decline in value. These loans then become a long term financial burden.
If you are having issues with a title loan as discussed, or better yet, before you pawn your car title to help with debt, contact our office nearest you to get help from one of our experienced attorneys who can help you resolve your financial burdens.
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Amy K Tanner is a shareholder in several of the Bond & Botes Law Offices. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Thomas Goode Jones School of Law. She focuses primarily on consumer bankruptcy law in the Huntsville and Decatur offices.Read her full bio here.