By John Campbell
Using an automobile as collateral for a loan is very risky. If you can’t pay off the loan you’ll probably lose your vehicle.
Before you ever sign the dotted line for an auto title loan you need to know exactly what you’re getting into. Only by knowing the full details of the loan can you make an informed decision if a title loan is right for you. When in doubt ask lots of questions.
Questions you should to be asking include:
• What’s my annual percentage rate (APR) on the loan?
• What’s the loan term?
• If I have to rollover the loan, what additional fees will I pay?
• Will I be required to pay down some of the principle owed if I rollover the loan?
• Is there a limit on how many rollovers are allowed?
• If I default on the loan, will there be any grace period before my vehicle is seized?
• If my vehicle is seized, how much time will I have to repay the loan before the vehicle is resold?
• What additional fees will I be responsible for paying to get my vehicle back?
• If my vehicle is resold, will I be entitled to any proceeds above what it costs to pay off my loan?
• Could I still be liable for any additional fees if my car is resold?
The loan terms, interest rate, any additional fees and the lender’s procedures for dealing with defaulted loans all will be of vital interest to you in finding a lender who poses the least amount of risk. Generally, the higher the fees you’ll pay and the sooner your automobile could be seized will up your risk considerably.
Never get an auto title loan without knowing the risks. The questions you neglect to ask could cost you your vehicle if your financial difficulties make it difficult for you to repay your loan.
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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.
