Tips for Negotiating Car Loan Title Companies

If you are shopping for a car title loan, you will need a few tips to get the loan you need.  Car title loan companies are a closely scrutinized group of lenders. Many states and jurisdictions are imposing new rules and regulatory guidelines for car title loan companies to prevent some of the blatant abuses that have taken place over the years against unknowing customers who have made title loans that resulted in unsustainable loan terms and loss of a primary vehicle.

What Are Car Title Loan Services

Car title loan services provide a way for certain borrowers to receive quick cash to meet certain financial emergencies. The loan is made against the borrower's vehicle for which the title is held as collateral. If the borrower is unable to pay the loan under the terms of the loan agreement the car title company is permitted to take possession of the vehicle in order to pay back the loan.  

Predatory Lending

Car title loans are mentioned in the same breath as predatory lenders and those companies that created the financial crisis of 2008. Many companies preyed on the most vulnerable borrowers that have the least in terms of credit and options available to meet basic financial needs. Loan terms have been made that lend money at rates in excess of 300 to 400 percent that have resulted in taking advantage of those individuals who are the most economically disadvantaged.

Providing Credit Counseling Services

Car loan title companies should consider creating a program that not only seeks to lend money to economically disadvantaged individuals but also provide them with credit counseling and opportunities to improve their credit situation. Car title loan companies are not found in wealthy communities, instead they are found in poor communities that have a higher percentage of borrowers with low income and poor credit. Providing services that helps to reduce the dependency of these emergency loan services may help these individuals improve their financial situation.

Placing Limits on Borrowers 

A car title loan should impose limits on certain borrowers who have come to rely on these services too much. The loan rates offered by many car title loan services are very high in relationship to comparable loans offered to other borrowers with a better credit rating. A person who comes to rely on these types of loans as a way to meet their financial needs will find that they will never be able to get ahead of their financial situation.

Continuing to borrow money at a rate of 25, 35, 55 or even 100 percent will worsen, not improve a person's financial situation. Recognizing this and taking steps to intervene and limit the amount of money an individual can borrow over a period of time may help the person reign in their habits and address their financial situation. 

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