Car title loans are expensive. Title loans usually have an average monthly finance fee of 25%, which translates to an APR of about 300%. Title lenders often add other charges to the loan amount, like processing, document, and loan origination fees. You also may have to buy add-ons, like a roadside service plan. If you have to pay added fees and buy add-ons, the cost of your loan will be higher.
Costs increase with rollovers. Like with payday loans, if you can’t repay a title loan when it’s due, the lender may let you roll it over www.paydayloansohio.net/cities/mansfeild/ into a new loan.
You can lose your vehicle. If you can’t repay the money you owe, the lender may repossess your vehicle, even if you’ve been making partial payments. When you get the loan, some lenders insist on installing Global Positioning System (GPS) and starter interrupt devices so that they can locate the vehicle and disable its ignition system remotely, making repossession easier.
Once the lender repossesses your vehicle, they can sell it, leaving you without transportation. In some states, lenders can keep all the money they get from selling the vehicle, even if they get more than you owe.
Federal law treats payday and title loans like other types of credit: lenders must tell you the cost of the loan in writing before you sign the loan agreement. They must tell you the finance charge, which is a dollar amount, and the APR, which is a percentage. The APR is based on how much money you borrow, the monthly finance charge, the fees you’ll have to pay (like processing fees, document fees, and other charges), and how long you borrow the money. Use the APR to compare the cost of borrowing money from different lenders. It’s the clearest way to see how expensive a loan is.
Be sure to read the loan agreement carefully to see if there are other costs or fees. These can include late or returned check fees. There also may be fees to roll over the loan.
Also, check with your state attorney general or state regulator about payday and title lending laws in your state. A number of states protect people from high-cost payday lending with small loan rate caps or other measures. Many states also require lenders to be licensed if they operate in the state.