90 Day Car Title Loans: 3 Pros and Cons

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November 9, 2016

90 day car title loans are popular options for those who may not be able to get a loan at a bank. There are both pros and cons to getting this type of loan. Many people can't get a loan, and especially not as fast as car title loans can be obtained. There are also some risks like the real possibility of losing your car.

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Pros:

Quick Cash

Car title loans allow the borrower access to quick cash for whatever reason they need. The process is so quick and simple, you can have your cash within a few days.

No Credit Check

Car title loans work by you putting up your title as collateral for security of your debt. Because of this, there is really no need to have a credit check done. This enables anyone with a car, no matter what credit they have, to get a loan they may need. In the case of a default, they can just sell your car, so they don't have to worry about you having bad credit, which usually signifies if you are going to be a good payer or not.

Keep Your Car

Another big advantage of a car title loan is that even though you are putting your title up for the car, you can still keep your car, as well as drive it during the loan period. The lender may require you to purchase extra insurance, but you can still keep your car. This is very important because you can get your money without having a lifestyle chance.

Cons:

High Interest Rates

Car title loans are often short term loans, and a 90 day title loan would qualify as such. During this time, you will pay a ton of interest. The rate may only be around 25%, but that is the monthly interest charge. That means that is the equivalent to approximately 300% APR which is enormous. The auto title loan rates can only steepen, and they will go up if you do not pay off your debt in time.

Risk of Car Loss

Even though you can keep your car throughout the period of the loan, if you do not pay your loan off in the 90 day period, you can actually lose your car. Taking a loan against your car is a big risk. It is well within the rights of the lender to repossess your car and then sell it. Since the car is put up as collateral, they can take it away as your payment. What is even worse is that they will get even more money because they only let you borrow around 50% of the value, and now they are selling it for double. So not only are you out a car, but they made even more money.

Liability

If there is a case where you do lose your car, you won't have to pay your debt off. However, if they sell the car and get less than what was owed from you, you actually are still liable for the difference. You not only lose your car, but then you also have to make your payments. That is pretty much the worst case scenario.

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