More and more consumers are turning to title loans for cash to pay everyday bills. Also known as a “pink slip” or “car title” loan, a title loan is a loan in which the collateral is title to the borrower’s motor vehicle. Title loans are subprime loans, often obtained by consumers who cannot qualify for more conventional debt instruments. The terms of title loans are particularly onerous to consumers. If a title loan is higher than $2,500 in principal amount, and they almost always are, there is no interest rate cap. It is not uncommon for a title loan to bear interest at an annual rate in excess of 100%. Moreover, if a borrower misses even one payment under the loan, the lender has the right to repossess the car serving as collateral.
David Lazarus of the Los Angeles Times has written a good piece on the dangers of title loans. You can access it here.
Lenders who make title loans are not above the law, and we may be able to help you if you have been harassed by a lender, or the lender has repossessed your car. Please feel free to contact us with your issue.