When the economy is bad, it is easy to fall for “easy” loans. These are loans wherein you can get the amount of money you need faster than you would if you were getting it from a bank.
The speed by which you could get money from a Title Pawn company is well and true. However, certain things are making it hard for even the most trustworthy loan companies to make it in the business.
Wrong advertising. In an effort to gain more borrowers, some Title Pawn companies have resorted to not making full disclosures of their terms and conditions. This leaves the borrowers feeling “trapped” into believing that giving up titles of their cars or properties as collateral would make it safe for them to borrow large amounts of cash. According to FTC on Title Pawns, title pawn loans are generally more expensive than bank loans. Over a short amount of time, as long as the amount is paid off in full, the 0% interest rate they have promised the consumer may hold true. However, the fact is that once the period is over, they take as much as 25% interest from the total amount the consumer has borrowed, and before they know it, the properties they have put as collateral are not theirs anymore. It’s a high risk form of loan.
High interest rates. There is always a payoff. While getting a loan from these auto title lenders is easier than a bank because there are lesser number of requirements, giving up your title to a big company is very risky. Should you fail to pay off the debt in full at the short term you are allotted, you will surely lose the car you have used as a collateral, or at least pay a hefty sum for a late payment. For someone who is already hard up, having to pay for a huge interest for a month’s late payment can be too much. You might not be able to get out of your debt, and you might even get a better deal just trying to sell of the property you used as a collateral to begin with. As most Deceptive Auto Title Lenders have done in the past, most title lenders fail to state this risk enough to the persons who are borrowing money for them. Common victims are those who have no insurance and are indebted because of medical bills, those who have been laid off but have had to maintain a high lifestyle, and those who have poor spending habits and bad credit scores who are unable to get good loans from the bank.
What should a title lender do? If you own a title pawn business, you can help the industry by contributing some good to the reputation of title lending businesses. You can help your consumers be better informed about their decision to borrow money from you, and you can do this by not posting false advertising about 0% interest fees when it hardly holds any water. There is a thin line between making your company more attractive to consumers and actually fooling the very people who are making your business thrive. Be frank about the terms and conditions of your loan, and make sure no one is forced to take out a loan without being informed well about the consequences of late payments.
Are you looking to raise some money but not 100 percent sure yet? Learn more about Title Pawn and Deceptive Auto Title Lenders.