In this episode of
Money Creation Explained we are going to cover What are Car
Title Loans?
A car title is a short term secured loan backed by a
person’s vehicle as the collateral. The average car title
loan is $1,000, but can range from $100 to $10,000 and is
based on 25% to 50% of the vehicle’s value. Repayment terms
are typically 2 - 4 weeks but can go longer if needed. These
loans are also available for motorcycles, boats, and
recreational vehicles. The vehicle will remain in the
person’s possession during the repayment period unless they
default on the loan.
An example transaction is as follows: You bring the vehicle
to the Car Loan Lender and it is worth $4,000. The Car Loan
Lender offers you a loan of $1,000 (25% of its resale value)
with a financing fee of usually 25% which (which translates
to around 300% APR) plus additional fees. The average car
title loan borrower pays about $1,200 in fees for the
average $1,000 loan. If you do not repay loan back on time
and are unable to extend the payment terms (which will cost
you additional fees) the Car Loan Lender can then reposes
and sell your vehicle, or sue you for the amount owned.
An alternative solution would be
Secure Loans which is a service offered by IOU Notes. It
allows users to leverage their own funds to obtain small
loans for personal and business use as needed and never pay
more than 5% interest per year on those funds. Using our
service a user can have a dependable emergency loan option,
help build or rebuild their credit, budget their money
better, and stop paying high interest fees from other loans.
This service was created because of the scarcity of
affordable small loans.
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