What is a Car Title Loan?
What is a Car Title Loan?
When you need to borrow money for a car and you are currently insolvent, then title loans is a good tool for that. Mortgage for an automobile could cost you $175 to $2,500 and the terms of payment would be within 30 days maximum, this is according to some State laws. However, this may not be the case all the time because in some states the loans could rage up to 30% in a month. This would cost a customer a 360% of annual percentage rate, and most of the time, lenders to these loans are granted the additional origination fees.
These lenders are often in service out in storefront destinations and they also accept check cashing and pawned items.
If you have no clue what a title loan is, then here is an example: you sign a document that binds you to a state law with interest that you have to pay within 30 days. You taking this title loan of $500 mean you are relinquishing your car title for collateral. If you fail to pay the collateral then your car will be repossessed. Aside from this car title loan you are going to give, you also have to pay the company a $15 origination fee. The typical rate for the interest is at 30% that is about 150% total interest.
Usually, these kinds of loans do not allow partial payments, so if you cannot pay it in full the lender may permit you to pay off within another 30 days but you must pay additional interest charges. This however is only allowed four times in some states.
So, how much does a loan cost? First, you have to pay a $15 origination fee and a $450 interest that is computed by the monthly interest rate in this case, $150 and the number of months you have to pay it 3 months. So the total cost will be $465 in an interest to get a hold of $500.
It will be wise to think very well whenever you have to engage in a car title loan. Not only are the interests and the fees high, but your car is also in a great risk.
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Filed under: auto loans • car loan
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