Auto Title Loans Riskier Than Payday Loans, New Report Says
Wednesday, March 25th, 2015
By Herb Weisbaum, NBC News Digital
When you’re desperate for cash and have run out of options, you might be willing to risk your car to buy yourself some time.
That’s what happens with an auto title loan. You keep your car, but sign over the title to the lender who uses the vehicle as collateral. If you don’t pay on time, the lender can repossess your wheels.
But the auto title loan market is “plagued by problems,” including unaffordable payments and excessive prices, according to a new report from the Pew Charitable Trusts.
“We found that auto title loans share the same harmful characteristics as payday loans,” said Nick Bourke, director of Pew’s small-dollar loans project. “They require balloon payments that borrowers can’t afford and most customers end up having to re-borrow the loans repeatedly.”
Published: March 25, 2015