Title lending has always been bashed by pro-consumer groups in Utah, which repeatedly assert the very nature of this type of financing is predatory. There’s no denying that title loans charge relatively steep rates, but that should be expected, considering the high level of risk lenders take in these transactions.
Not to say that all lenders are clean, but sometimes the borrower might be the one responsible when a title loan doesn’t work out. Why? Here are some of the blunders debtors do that make this secured financing even riskier:
Being Overoptimistic to Repay the Loan on Time
If you plan getting a car title loan in Taylorsville, West Jordan, or Spanish Folk, make sure to keep your confidence in check before signing on the dotted line. You may be sure of yourself that you’d have the money come payment day, but disregarding the possibility of things not turning out as planned is a cardinal sin.
According to a Vanderbilt University study, most borrowers are so positive they could repay the loan on time, only to find themselves facing a larger debt to shoulder after being unable to cover the balance.
Failing to Be Fully Informed
Title loan lenders usually disclose all the information a borrower needs to know about the transaction, but it doesn’t mean the message gets across successfully. Unless you’re 100% sure you understand what exactly are the consequences should you default, and what options you have to avoid repossession, shying away to ask your pressing questions is the worst you could ever do.
Disregarding the Lender’s Incentives
Rewards may just be a bonus, but not using them to your advantage renders them worthless. You should be aware if your lender is running any form of incentive scheme to help save you in interest and finish your loan early. This could serve as an additional motivation for you pay off your borrowed sum and prevent losing your vehicle.
All financial products involve some kind of risk, but lending money always become unnecessarily dicier without doing your due diligence. Do your part, leave no stone unturned to be a smart borrower, and obtain the debt you need.