Title car loan scams take advantage of unwary borrowers. Although some lenders are in business to make honest money, others may attempt to push consumers into expensive, high-risk loans using the customer's car as collateral. Scams to avoid are listed below:
1. High Interest Rate for Small Cash Loan
Some car title lenders charge 300 percent annual interest, in addition to loan fees.
2. Repossession of the Borrower's car
If payment is not made in full at the end of the month, late night repossession of your car will most likely occur. Lenders often hold a duplicate set of keys which makes this a simple task for them.
3. Lender may Sell your Car
If you don't repay as agreed, the lender has the right to not only take your car, but to sell it to collect their money. They can sell it for more money than what you owe on the loan and make a profit. The loss of your car could lead to a loss of your job and place you in a worse position.
4. Unaffordable Balloon Payments
Payments may begin at what seems to be a reasonable rate, but the amount may soon increase to an unaffordable amount to repay.
5. Extended Time for Repayment
Car title loans are meant to be short term emergency loans and you usually must pay the loan back within 30 days. If you need a time extension to repay the loan, that may be arranged, but it may be regulated to a certain limit and also result in additional fees and penalties added to the loan.
To avoid title car loan scams, it might be a good idea to investigate alternatives to title loans.