What to Look for and What to Watch Out for in Auto Title Loans

As long as you own an automobile you can qualify for an auto title loan. If you need cash in an emergency and can't get a traditional loan, open or extended credit line or borrow money from a family member or friend then an auto title loan may be your only alternative.

Most auto title loans have very high interest rates and include many expensive fees. However, you can often get these loans with less risk and fewer fees if you do your research and know what to look for.

The key to getting the best deal with the least amount of risk on an auto title loan is to shop around before applying. Don't just take the first auto title loan you see. Even if you have an emergency that requires cash right away, you should take the time to at least find out some simple facts. Call local lenders or do an online search for the top auto title loan companies. Compare the interest rates and fees between the different companies and choose the one with the best rates.

Make sure you only take out the funds you need and no more. Never take out an auto title loan if you aren't one hundred percent sure you can pay off the loan in full at the end of the loan period. If you end up rolling over the loan at the end of the period then you will pay a lot more in interest and fees.

If your loan is scheduled to be paid back through a direct deposit from your bank account, then make sure you find out the date the funds will be withdrawn. If you don't know the date you could end up missing the payment and incur a high overdraft fee.

Even if you don't plan on missing a payment or needing to rollover the loan, you should look into all the possible additional fees that could be involved with the loan. This can help you be prepared for any additional expenses.

If you don't think you'll have enough money to pay the loan and all the additional fees by the end of the loan period then you will end up defaulting your loan. This could cause your car to get repossessed. This is the biggest risk of auto title loans.

Find out exactly what the lenders' policies are if you miss a payment. Always plan ahead when you apply for an auto title loan. To find the best lender be sure to ask the following questions:

• If a default occurs can anything prevent my car from getting repossessed?
• How quickly will my car be repossessed after default?
• If my car is repossessed will I have any time to repay the loan before the car is resold?
• Will I be charged storage fees if the car is repossessed?
• If my car is resold will the money go towards paying off the loan or will I still have to pay for the loan?
• Am I entitled to any of the money from the sale of my car?

Send this to a friend