Auto title loans: If at all possible, just steer clear

On behalf of The Rollins Law Firm posted in Debt Relief on Wednesday, January 21, 2015.

When it comes to auto title loans, that method of securing quick cash enabling a borrower in Mississippi or elsewhere to pay off immediately pressing debt can be a godsend -- for the lender.

For the borrower, unfortunately, obtaining a loan secured by a vehicle often results in a truly rough ride. In fact, and as we note in an article on our website entitled “Auto Loans Can Lead to Financial Disaster,” a loan secured by a vehicle as collateral often turns out to be a major headache for a borrower.

Here’s why.

For starters, and in most instances, an auto title loan simply replaces one type of debt with another, with the payment duties associated with the vehicle-secured debt being far more onerous than the original debt exactions.

According to one estimate, a consumer borrowing $1,000 under the terms of an “average” auto title loan will ultimately pay back three to four times that amount to extinguish the debt.

As we point out in the above-cited article, the starkly high interest rates often pegged to such loans trap borrowers in many instances “in a cycle of debt they cannot pay.”

And the repercussions of that are obviously dire. Consumers are sometimes forced to renegotiate new loans with even more unappealing strings attached. Ultimately, many borrowers have their vehicles repossessed.

Struggling mightily to stay on top of an auto title loan might reasonably indicate to a consumer that an alternative form of debt relief might be required to make real inroads on punitive repayment duties.

A proven bankruptcy attorney can help a beleaguered borrower explore debt relief options and employ a strategy that truly promotes financial stability and a fresh start.

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