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Before Securing a Title Loan, Ask Yourself the Following Questions

April 23, 2020 | Daniel Dewitt


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Title loans are an invaluable tool for most Americans: they’re fast, convenient, with title loan places located all across the state, and are the perfect way to get the cash you need for emergencies. Whether that emergency be job loss, an emergency room visit, or car accident, having access to fast cash is the best way to handle the situation.

But before you get one, you need to ask yourself some questions.

What’s your plan to pay it back? What’s the specific problem you’re trying to fix? How will you prevent the same situation from happening again? All these are important questions to ask yourself before you take out a title loan. Jumping into any situation before you’ve fully thought through the consequences is a disaster waiting to happen, but luckily we’ve got the answers to the questions you should be asking.

What’s My Plan to Pay it Back?

Look before you leap is a common saying for a reason, and it’s because it’s good advice. Far too often we reach for the nearest solution to a problem without thinking about what comes next. This can have potentially disastrous blowback later when the devil wants his due and you’re not prepared.

With any type of loan it’s important to have a concrete plan upfront for how, and when, you’re going to pay it back. Interest means that the longer you wait to pay them back the more you’ll have to pay in total. The best way to minimize any interest payments is to draw up a budget beforehand to identify where you’re going to get the money to pay back the loan at each step in its repayment.

Do I Have A Car I Own Outright?

This is a simple, but necessary question to ask yourself before taking out a title loan. Because title loan places use your car as collateral for your loan, the value of your car is what decides the amount of your loan. This takes into account things like the make and model of your car, along with its current conditions.

All three of those factors are meaningless if you don’t own your car outright though. This is why one of the required items for a title loan is the ‘lien-free title’ to the car you’re taking a title loan out on. A lien means essentially that someone else also has claim to the value of your car, meaning that you don’t actually have the ability to promise it as collateral.

What’s the Specific Problem I’m Trying to Fix?

It’s a normal reaction when beset with a financial challenge or three to start muddling them in your head and start to think of them as a single oppressive cloud over your head that can be banished with the light of some fast cash. Unfortunately, muddled expectations can lead to unsatisfactory results, and you may find that cash can’t fix all the problems that you face, or that you end up spending the money on minor problems while ignoring the major one you face.

The best way to avoid this situation is to list out before you go to a title loan place the specific problems you face, and exactly where you’re going to allocate the cash you get. For example, if you’ve just lost your job, list out your expenses and then mark the specific ones you’re going to spend your title loan on when you get it. This will keep you from wasting the money once you get it, and also ensure that you come away from the situation with your problem actually fixed. Specificity is tiring, but undeniably important.

How Will I Prevent This From Happening Again?

This may seem like getting a step ahead of yourself, after all you’re still actively trying to right the ship at this point, but it’s still worth it to take a minute before you take out a title loan to try and figure out how you’re going to avoid the same situation simply happening again in the future.


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The best way to do this is to sit down and create a budget for the future. Analyze your income and expenses, and then see how much you can put into an emergency fund each month. Though you may not be able to put in much, every little bit will help and add up over time so that the next time you’re hit with a financial emergency you’ll be able to handle the situation.