An Automobile Title Loan May Not Be Your Best Option

An automobile title loan is very much like a payday loan. These loans are usually characterized by a short-term period and have high rates of interest. Lenders who are willing to extend these types of loans target individuals who are badly in need of cash. If you own the title to your car, it would be very easy for you to borrow money from title loan companies. There is a lot of Detroit money lenders who will let you borrow money with the title to your car serving as collateral for the loan.

Beware of Balloon Payments!

What is a balloon payment? In contrast to an amortized loan, a balloon payment represents the remaining amount you need to pay to settle the whole loan. Let’s suppose you got an auto title loan for $30,000. If your monthly payments represent only the interest on the loan amount, then you would still have to pay $30,000 (principal) at the end of the loan terms. If you fail to settle this amount, the lender will repossess your vehicle and then sell it. Think twice before getting a title loan, or you may end up losing your car.

Written by: Katrina Marion

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