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Should I Get a Title Loan to Pay Off Debts?

April 4th, 2010

car-title-loan.jpgTaking out a title loan may seem like a good idea during troubled times, but what does it really mean and what are the real costs of getting one? If you need money fast, but your credit score isn’t the greatest, a title loan may be the only way to get any kind of loan. With no credit checks, it may seem like a great idea, but it can also get you into a lot of trouble.

The first thing to consider when looking into a title loan is why you need one to begin with. If you need quick money, you may not be able to pay your debts already. If you take a risk and put up your car title, you may lose your vehicle. Don’t take out a title loan unless you’re 100 percent certain that you can pay the agreed upon amount of money each month during the length of the loan.

In order to qualify for a title loan, you will most likely need to own the car outright. If you still have a loan on the vehicle, you cannot use it for a title loan, so it must be paid off completely and have a clear title. To get a title loan, you’ll in essence be “pawning” the title of your car and the car will have a lien on it. These types of loans usually come with a very high interest rate and the money that you’ll get won’t be as much as you think. You will ultimately end up paying for much more than the car is worth and in some cases, if you get behind on payments, it may be cheaper to buy a different car.

The bottom line is that you should avoid getting a title loan unless it is truly necessary. You may end up losing your vehicle and that wouldn’t be a good thing. If you’re having trouble paying your bills or you find yourself in a pinch, a title loan may not be the way to go. Your financial situation may not improve enough to ensure that you get to keep your vehicle.

This article was supplied by Beth Lytle from Constant Content.

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