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Auto Title Loans are becoming the new cycle of debt for consumers

Car Title Loans

As the practices of the payday loan industry are coming under scrutiny and some regulation lenders are detouring into auto title loans.  With high interest rates and fees unwary consumers can be caught in a cycle of debt with additional risk of losing their vehicle.

Nationwide more than 2 million people borrow from storefront lender against the value of their cars according to a study released in March by the Pew Charitable Trusts.  This means if they default on the loan, the lender can repossess the car.

 

Chained to loansLike payday loans the auto title loan will typically require a balloon payment that the borrower is unable to pay and forcing the customer to re-borrow the loan again and again and again. Making it next to impossible to get free from the loan.

 

 

300 percent is the most common annual percentage rate (APR) charged nationally.

50% of borrowers have trouble meeting expenses and use a title loan to cover regular expense.  If you are considering a title loan you need to review your other options such as cutting back on expenses such as food and clothing, borrowing from your bank or credit union, having a garage sale, selling some personal possessions or delaying payment on some bills before taking a title loan.


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Posted June 2015