When you’re living on a fixed income or facing bills you can’t afford to pay, it can be tempting to consider borrowing from places like car title loan companies.
After all, these lenders put cash in your hands in a way that’s convenient, fast and relatively drama-free — at least, at first.
When you get a car title loan, it’s a short-term loan — usually for just one month — that you secure with the title to your vehicle.
Although the majority of title lenders require you to own your car outright, some don’t.
Either way, the lender puts a lien on your car. When you repay the loan, the lien is removed and you get your title back.
Sounds easy enough, right?
Generally speaking, it is.
Even retirees can obtain car title loans, as long as they have a valid photo identification and proof that they own the vehicle.
In many states, there isn’t even a credit check.
The loan amount is based on the appraised value of the vehicle, and it’s typical for consumers to be able to borrow anywhere from 30 percent to 50 percent of their car’s worth.
And here’s where car title loans get dicey.