When people think of car title loans, there tend to be some demographic stereotypes which come to mind. Most people would assimilate a title loan with large metropolitan regions focusing on the low-income areas.
In 2005, there was a study that was done in Cook County Illinois to gather needed information on car title loans based on public information. Chicago which is located in Cook County in the United States of America and naming the city gives a reader a better idea of the demographic region that’s represented in the study. There were no more recent findings posted, but knowing how today’s society has people living on paycheck and carrying larger debt figured, one can only imagine the increase in numbers for the following tidbits of information.
There were 260 storefronts which are located in Illinois. These stores were run by sixty-three different title loan lenders. Chicago is a major metropolitan area with many public transportation opportunities. The train and bus systems set up in cities like Chicago have been helping residents meander throughout the surrounding communities and within the city. It’s interesting how that even within this metropolitan region, there are many title loan companies that do not only exist, but thrive.
The median loan for this area in 2005 was about $1500. The median finance charge was around $1536 with an average APR of 256%. It is not surprising that people were paying more in finance charges than they were loaned. If the loan is repaid on the original due date, typical loans will charge 25% interest and the full payment would be $1875. Extending a title loan will prove to be costly.
The high cost of these loans was as a result of people only paying fees every month and not paying down the actual amount. If anyone is trap in a cycle of debt, they will continue to thrive within problematic finances and short-term loans can be used in order to pay off the former ones. When taking out a car title loan, a borrower needs to have a plan to pay off the debt in a realistic amount of time to keep the cost of the loan from increasing.
If a person was brought to court because of a defaulted loan, the cost of damages owed was well over 3 times the main loan amount. Between fees, principal balance, interest and court costs, a short-term loan may be the best choice.
Some borrowers often failed to report to court which automatically resulted in a default judgment against them. The borrower must go to court date in order to have a small chance of any leniency in the case. But the borrower must know that failure to repay the loan may result in repossession of the vehicle that is used as collateral.
Nowadays, car title loans have become popular. What has now changed is the opportunity for people to get emergency cash which they can get access to through online.