If you are struggling financially or are in debt, you aren’t alone. Even though the economy is somewhat on the mend, many are still struggling to pay their bills, put food on the table, and get out of debt. Over the last three to five years while our country fought through a struggling economy filled with job loss, stock market crashes, and loss of retirement benefits, millions of individuals have had no choice but to default on car loans, credit cards, and even mortgages as a result have increased their debt, decreased their credit ratings, and at the same time increased their creditworthiness and risk. So for those who have fallen victim to the repressed economy, what options are there to get out of debt?
Just because you don’t feel like you can run to a bank and take out a traditional personal loan or your credit cards are in default or maxed out doesn’t mean it’s hopeless. One option that has proven to help people get out of debt and on the road to financial recovery is title loans. Title loans are built for those individuals who want to get out of debt, who need to get out of it fast, and who may have poor credit history. Title loans are often approved in as little as fifteen minutes!
But…before you jump in with both feet and sign your life away on the dotted line, there are several pitfalls to title loans that you should be aware of.
High Interest Rates. One of the most undesirable considerations regarding title loans is the high interest rates. Some title loan companies offer loans with interest rates as high as 300%! With interest rates this high, individuals will never get out of debt, and will even lose their vehicle used as loan collateral as a result.
The reason why title loans come with such high interest rates is because most title loan applicants have limited or poor credit history, which makes them high-risk borrowers. In order to secure their assets, title loan companies need to charge higher interest rates to make up for the high risk involved.
Difficult Repayment Terms. In addition to astronomical interest rates, some title loan companies also offer strict and difficult repayment terms. Some title loan companies offer title loans with high interest rates and do not offer a grace period for making payments. As a result, if an individual misses or is late with making a payment just once, the title loan company will immediately repossess his or her vehicle and then sell the vehicle to pay off the title loan, all while still making a profit.
Higher Chance of Default. With both of the above pitfalls present, ultimately, an individual’s chance of defaulting on a title loan is that much higher. The strict repayment terms coupled with high interest rates can be a recipe for disaster for some individuals, who are already struggling financially. In addition, defaulting on a title loan can negatively impact an individual’s credit rating, worse than what it was originally. This only continues the downward spiral of a financial strain, struggle, and debt.
But there is some good news. No all title loan companies are out to take advantage of the financially vulnerable. In fact, Utah title loan companies are companies that can be trusted. Affordable Title Loansis one company that offers Utah title loans at lower and fairer interest rates that really help individuals get out of debt.