Showdown at Title Loan Corral

Showdown (1)

Why the Lone Star State is the wild wild west of car title lending…

You’ve probably heard about the dangers of predatory title loans. High interest rates, short repayment terms, and additional fees put these loan products at the bottom of the personal lending barrel. However, there are many people out there who have bad credit and do not qualify for a traditional personal loan. And for folks with bad credit who need a loan in Texas, their experience with an auto title loan could be especially rough.

Title Loan Basics

Title loans are a kind of short-term loan that uses the title to your car, truck, or motorcycle as collateral. In return for your car title, the lender issues you a cash loan based on a fraction of your vehicle’s value. Once you’ve repaid the title loan, you get your title back. Easy enough, right?

But the devil is in the details. Repaying a title loan becomes difficult when you’re saddled with an average Annual Percentage Rate (APR) of 300 percent–that’s 25 percent per month–and you only have 30 days to pay the loan off in full plus fees and interest.[1] Oh, and using your car title as collateral means that the lender can repossess your vehicle if you don’t (or can’t) pay.

Where the Repo Men Roam…

And in Texas, it’s even worse. Due to a lack of rules and regulations to oversee these dangerous and predatory loans, Texas really is the wild, wild west of title lending…

While the actual law in Texas caps title loan interest rates at 10 percent, lenders in the Lone Star State are exploiting loopholes to take advantage of people in need.[2] These sneaky tactics allow them to charge unchecked interest rates and additional fees, with some Texas car title loans sporting an APR of 500 percent.

And guess what? Lots borrowers can’t afford that. Within the first three-quarters of 2014, payday and title lenders repossessed over 32,100 vehicles from Texas residents.[3]

To get the full story, check out our article: Texas: The Wild West of Auto Title Lending.

If you have bad credit and are looking for a fast cash loan, take our advice and avoid a showdown with an auto title lender. Borrow money from a family member or friend, ask your employer for an advance, or contact OppLoans for a safer, more affordable loan. Our interest rates are lower, our repayment terms are longer, and your vehicle won’t be on the line.

References:

  1. Cafiero Giusti, Autumn. “The consumer perils of a car title loan.” BankRate.com. October 29, 2013. Accessed May 26, 2016. https://www.bankrate.com/finance/auto/consumer-perils-car-title-loan.aspx.
  2. “Car-Title Loan Regulation.” ConsumerFed.org. December, 2012. Accessed May 26, 2016. https://www.consumerfed.org/pdfs/Resources.CTL.StateLawTermChart12.2.12.pdf.
  3. FAQs” Texas Fair Lending Alliance. 2013. Accessed May 26, 2016. http://www.texasfairlending.org/resources/faqs/.