Car Title Loans can be Risky for Consumers

Especially in light of the current state of the economy, more and more consumers are turning to short term high-interest loans to make ends meet from month to month. These types of loans often create a cycle of indebtedness, and these lending programs often result in consumers paying unconscionably high interest rates. The most common type of short term loan people are familiar with is the payday loan, but equally expensive is the car-title loan. The Consumer Federation of America published a report this month detailing the problems and risks associated with these loans. If you are facing financial difficulty, you should contact a St. Louis bankruptcy attorney for a free consultation. A bankruptcy attorney will help you determine your best course of action, and is bound by ethical rules to advise you with your best interests in mind.
As the name suggests, car-title loans use a consumers owned car title to secure a cash loan. The standard characteristics of the car-title loans looked at in the study are 30 day loans with an uncharacteristically high payment due at the end of the term to buy back the title. The loan amounts are generally based on the lender’s valuation of the car. These types of loans are typically given at an interest rate of 25 percent per month, which equates to 300 percent per year. At the end of the term, the borrower has the option of renewing the loan by paying the interest accrued to extend the loan another month. Because borrowers are under the threat of repossession by the lender, those who are unable to pay at the end of the month often renew the loan and thus enter into a cycle of increasing debt.
For most people, a car not only provides convenience but also a way to get to and from work, school, child care, or to even a job interview. As a result, the car is not just worth its value, but also the income it allows the owner to bring in. Car-title loans are not only high cost and risky form of borrowing, but also jeopardize a person’s financial wellbeing in collateral ways as well.
Contact a St. Louis bankruptcy attorney today for a free consultation
If you are facing financial difficulty and are considering getting a car-title loan, contact an experienced bankruptcy attorney for a free consultation before making any decisions. Bankruptcy may be able to help you get out of debt and provide you a fresh start. In order to determine whether bankruptcy could benefit you, you should discuss your specific financial circumstances with an attorney. The Westbrook Law Group practices exclusively in the area of bankruptcy law and has helped hundreds of people regain their financial footing. If you are concerned that you are unable to afford bankruptcy, we will work with you to find a solution that works for you. To schedule a free consultation, contact us today at (636) 493-9231 or by filling out the online contact form on the right side of this screen.

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