Dangers of a Car Title Payday Loan
Getting a car title payday loan can have its negative sides. These loans can be called many different things. You may see them called car cash loans, pink slip loans, or even an auto pawn loan. They all mean the same thing and are used interchangeably. Here are the potential dangers of a car title payday loan.
High Interest Rates
The interest rates on these types of loans are incredibly high to start with. These loans are usually only for a month or so, so the interest rates are not in APR figures, but monthly. A 25% interest rate seems fair to get the quick cash, however, that is the equivalent to a 300% interest rate. You might as well get the loan on a credit card instead.
Default Part 1
If you default on the loan, two things can happen. The first thing is that you will have your interest rates increased and be allowed more time to pay the loan. You should only get into one of these loans if you absolutely need the money and also know that you will have the money to pay it back in a very short time.
Default Part 2
The other, more dangerous risk of these loans is that you can lose the car when you default. The lender does not need to give you extra time to pay, and can just repossess your car if they wish. They would then go ahead and sell the car to recoup the money they are owed by you. This is the biggest risk with these loans, and you should realize this before signing for one.