Many people who use car title loans to make ends meet, often end up financially worse off than before they ever got the car title loan. The car title loan can trap the borrower into a cycle of high interest which like a payday loan never seems to end. The Bankruptcy Lawyers at The Law Offices Of R.J.Atkinson have counseled thousands of people with financially based legal problems including many with car title loans. We have seen a lot of people get caught up in the cycle of car title loans that end up paying more in interest than their vehicle is worth. We regularly come across people who end up with thousands of dollars in debt from car title loans and there are many others who get their cars repossessed because the interest becomes too much. Car title loans can drain a person in financial need to their limits, and put their means of transportation risk.
If you have fallen victim to a car title loan or are being held financial hostage by the interest charged on a car title loan, contact the Texas Bankruptcy Attorneys at The Law Offices Of R.J.Atkinson. We can answer your questions about car title loans, and we may be able to help you to stop the car title loan cycle.
What is a Car Title Loan?
A car title loan is like it sounds. It’s a loan on your car title. Car title loans are usually short-term loans with high interest rates. Car title loans are a very expensive form of credit, that a check cashing company, a currency exchange or check casher, pawn broker, finance company, or actual “car title loan company” will make. Since car title loans are based on a clear title, the loans are made oftentimes without a credit check. Car title loans are secured by the title to your vehicle so if you don’t pay, they can take your because they have the title. Car title loans are targeted to those people who need cash quickly and usually have no other means to get money fast. Car title loans provide borrower’s immediate cash in exchange for the title to their vehicle. Car title loan companies claim to be an easy solution for people in financial need because all you have to do to qualify for such a loan is to provide a clear title. You simply need a vehicle that has a clear title free and clear of liens, or in other words, a vehicle that is paid off.
How Much Can You expect to Get from A Car Title Loan?
Providing that you have a clear lien free title, the typical car title loan ranges from $250.00 to $5,000.00 to as high as $10,000.00. Some companies may lend more, and some companies lend less, but you can usually expect to get about 10% of your car’s value. Car title loan companies will usually charge a loan origination fee, an administration fee, as well as a title transfer fee. Some car title loan companies charge other fees such as a key charge, so in case you default they can just go and pick up the vehicle.
What are the Terms of a Car Title Loan?
Like all situations where the borrower has few or no other options, car title loans tend to carry very high interest rates. Like payday loans and pawn shops, the interest rate is Usury. In other words it is usually the maximum allowed by law. The term of a car title loan is usually 30 days, and the interest rates charged average between 25% to 35% per month. Car title loans are often renewable and depending how they are set up, so like payday loans they can go on as long as you continue to pay.
What is the Danger with Getting a Car Title Loan?
Just like payday loans and pawn shops, people can sometimes become very dependent on car title loans once they start the process, and they oftentimes end up taking one loan after another. When they encounter financial difficulty or set back and desperately need money they turn to whatever is quickest and easiest. Eventually, they come to a point where what started out as a simple $250.00 short term loan on their car, has turned into a debt of $1,000.00 or more in a very short period of time and they still don’t have their title back. Ultimately, they are unable to pay the money back, and all too often these people will end up loosing their vehicle. When they can’t repay the debt, their vehicle gets repossessed and their financial world quickly comes crashing down. Its not uncommon to end up paying $5000.00 for your $1500.00 vehicle.
Is Bankruptcy a Solution for Car Title Loans?
Bankruptcy can be an option in some cases. A car title loan is a secured loan, so if you’re behind on the loan and you file for Chapter 7 Bankruptcy you won’t be able to keep the car. If you file for Chapter 13 Bankruptcy you have to pay back the amount you have fallen behind on over 3 to 5 years. If the title isn’t in your name at all, it can complicate things and it will come down to the agreement, timelines, obviously the law(s), and a number of case specific facts that should be evaluated by an attorney on a case by case basis. In other words, Contact Us to discuss your particular situation to see if bankruptcy is an option to address your car title loan. If you do decide that bankruptcy is the option for you, you may also be able to stop creditor harassment, stop foreclosure, eliminate or significantly reduce credit card debt, medical bills, and certain taxes.
Don’t Let a Car Title Loan Leave you Stranded.
If you have a car title loan that’s holding you hostage & ruining your life and are looking for a fresh financial start, the Texas Bankruptcy Attorneys at The Law Offices Of R.J.Atkinson may be able to explain your Debt Relief options at a free initial consultation. We represent people with financial problems in Houston, Austin, San Antonio, Dallas, Waco, San Marcos, Plano, Sugarland, Denton, Richardson, Sherman, Round Rock, Georgetown, and throughout the State of Texas and may be able to assist you to reduce or eliminate your Debt under the Bankruptcy Code. Don’t wait until it’s too late.
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