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Short-term loans are on the rise in the US, especially payday loans and title loans. Payday loans are often regarded as super-risky, and potentially loan sharking. Are title loans worthy of this title as well? Can they be universally panned as credit destroyers, or can they be acknowledged as credit savers? Title loans are made as short-term loans which use the title to a person's car as collateral. Once the loan is paid off in full, the title to the car is returned to the owner. It seems simple, and innocent. Most people, however, will balk at the numbers that they see on title loans APRs. Normal loans may have anywhere from 4% APR to 39% APR, depending on the type of loan. Hearing that there is a 100% to 500% interest on any loan generally will cause wide-eyed shock and a lot of stammering. Oddly enough, this is the often the norm when it comes to some title loans. The answer to the question of title loans being universally good or bad is simple; they are great for some people, but terrible for others. It depends on your personality, your financial situation, whether or not you have a stable job, and whether or not you are forgetful. Hearing 500% APR, or even 100% APR on any loan is intimidating, to say the least. It's no surprise that many people accuse title loan companies of loan sharking. One late payment, or one unusually long short-term loan can quickly grow out of control. This, coupled with accepting people with low credit ratings can be a recipe for financial disaster.
On the other hand, if used responsibly, a title loan can be a great method to repair poor credit scores. As long as each payment is made on time, title loan companies will report this to the credit companies, which in turn, will raise your credit score. Short-term loans are only supposed to be paid off in 2 months at the very most. This means that depending on the loan, the interest can be as low as 10 dollars a month. When calculated out, this makes the APR look reasonable. In order to figure out whether you should apply for a title loan, you have to ask yourself multiple questions. Can I remember to pay this off in one month? Can I actually pay of this amount of money at this rate? Do I now have a stable job which can help pay this halfway? Try to calculate how much money you can reasonably borrow and pay back with little problem. Write down the answers that you come up with, and you'll soon know your answer. As a whole, title loans are necessary in society, as are payday loans. As long as you calculate how much money you can afford to take in the loan (and choose not to owe more than that), a title loan is a safe bet. For those who recently had financial troubles, but recently got a job, a title loan might be a decent answer. It's important to know yourself, your situation, and ask yourself if you are prepared to pay off the loan in time. Whether a title loan is a good idea or a calamity waiting to happen is one of those answers that only you can know.
Title Loans
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