The lender has to give you a notice that it is in the process of repossessing your car. If you receive this notice, it is important to act immediately and try out the different methods to get out of your title loan without losing your car.
With title loans, the consequence of defaulting on your payments is the repossession of your car. You cannot go to jail for missing out on your payments. Before your car gets repossessed, you should receive a notice from your lender that they are in the process of taking your car away.
However, many debt collectors use threats to force borrowers to pay up their debts. One of these threats is telling you that you could go to jail for not being able to pay the title loan. This is false. You cannot go to jail for defaulting on payments www.paydayloanstennessee.com/cities/camden/ on your title loan. The most that could happen is losing your car.
Were You Thinking of Getting a Title Loan? Here’s Why You Should Avoid It in The First Place
A title loan is a fast way to borrow money. You can usually get approval and get the money within the same day as long as you own a vehicle. The catch? You have to give the title of your car as a collateral in case you cannot pay the debt. The reason many people get a title loan is because it is very easy to get one. You don’t need to go through the hassle of getting a lot of paperwork to get approved. Even if you have bad credit, you can get approved for a loan as long as you have a car.
You iliar with the basic concept of a title loan, however, a lot of people take out title loans without really understanding that the sky high interest and fees can cause them to lose their cars
Unlike a personal loan that allows you to pay the debt in monthly installments with the interest built in, a title loan’s payment structure is very different. With most car title loans, you have to pay the entire amount after 30 days. If you are unable to pay the debt, you are usually allowed to “roll-over” the debt for another month. If after two months, you still do not have the money, the lender usually allows you to roll it over again until you fall into what is referred to as a title loan sequence.
The big problem with a title loan is the very high interest which usually reaches 300% APR or annual percentage rate. That means that if you get a title loan, your interest per month could be up to 25% of your loan amount and that may not even include additional fees. While the average amount of title loans in the U.S. is $959, the problem occurs when you add up the interests and fees. The total loan amount could then balloon into an amount you cannot manage to pay anymore.
For example, if you borrowed $700 from a title loan lender, you need to pay it in 30 days with a 25% interest so that’s already $875. If you can’t pay that amount, you get charged another 25% to pay it after another 30 days which raises your loan amount to $1,050. That means in 60 days, you’re already paying $350 in interest alone. That’s already half of what you originally owed! Take note that that’s only the interest. Some lenders charge additional fees that you may not have noticed or ignored at first when you took out the title loan.