Car Title Loans

Car title loans are those loans where title of the car and a duplicate key is held as collateral. Car title loans are a type of emergency loan. It may look like emergency loan but in reality this is a trap to borrowers.

Risk Factor

High risk is put on the assets, and this will indirectly affect the well being of the family. Many laws are put foreword to protect consumers from Car title loans. Federal agencies like Consumer Financial Protection Bureau or CFPB helps consumers in Car title loans matter. The annual interest will come at the rate of 300% or sometimes it will be more than this. In United Sates, in the state of Oregon 19% of the Car title loans were paid off in May 2001. The Missouri Auditor found that, normally car title lenders make 3.5 times more renewal loans than new loans every month. Most of the state’s ban high-priced car title lending, but in those states where Car title loans are legal the industry is growing at a shocking rate. Lenders usually give loan at a rate higher than 30-50% of the value of the car. So, most of these Car title loans are over secured.


The borrower of the Car title loans has to repay the whole amount in a stipulated time including the fee. Usually the time limit will be one month. If the consumer is not able to repay when the loan is due, he or she can either pay another fee to roll the Car title loans over, or the lender will take the car and sell it. In such a case the money from the sale will be kept by lender in place of the money given. Often the borrowers will not be able to pay the full amount they owe on the stipulated date so they must extend or roll over the loan frequently by giving another fee.  After rolling over the loan several times and paying the fees, consumers can end up giving more in fees than the amount they have originally borrowed.

Car title loans have high interest rates. Car title lenders can take the car at any time if the borrower does not repay the loan amount on stipulated time.  One fine day you may walk outside and find the car has gone.  This can lead to too many financial and other problems, since most people depend on cars to get to the doctor’s office, work, school, etc. Lose of equity is another problem associated with Car title loans. If the lender has taken the car, he or she can sell the car and can keep the entire amount from the sale and not just the amount owned by the borrower.