Ask Andy: car title loans - Action News 5 - Memphis, Tennessee

Ask Andy: car title loans

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MEMPHIS, TN -

(WMC TV) - Title loans mean exactly that. You put your car's title up for collateral in exchange for a short-term loan and quick cash.

In the realm of personal finance, there's nothing more stupid or more irresponsible than a title loan.

For one, possession is nine-tenths of the law in vehicle ownership. You give a title loan company your car title, it essentially "owns" your vehicle. The good folks at the Federal Citizen Information Center are quick to add that when you get a title loan, you must immediately turn over your car's title. Some title loan companies ask for your keys, too -- making you leave your car on the lot.

That's possession, my friend.

A title loan typically carries enormous interest rates. According to the FCIC, the rates can be as much as 25 percent for one month. That's a 300 percent APR! The worst credit cards in the world don't come close to an annual percentage rate that ridiculous.

If you don't pay, the interest piles up. Assuming the loan company allowed you to keep your car without your title, it may dispatch someone to repossess it. All because you needed an extra $300 or so to get you through the month.

I don't care how desperate your financial situation. Title loans are never an option. They will only make your world more miserable.

Copyright 2012 WMC-TV. All rights reserved.

 

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