This consumer is having trouble paying his rent and has decided that taking out a car title loan might be the right answer for him until he is making enough money to be able to pay the rent and utilities. He expects that he will be able to do this next month.
His credit rating is not stellar and he may have difficulty in obtaining a personal loan at rates that he feels are reasonable. He has just moved, has started a new job and really has no assets to speak of that will contribute to his credit rating. He does have a car that is paid for and apparently worth $12,000 as a trade in. He had a car sales person confirm this although before a loan could be approved the car would need to be properly appraised to confirm its value.
The table at the bottom of this page illustrated the differences in terms of interest rates, total interest cost and monthly payments for different loan types. At 5%, which is the rate that he might be able to obtain if he had excellent credit, the interest cost is $81.23 assuming that he repays the loan over a 12 month period.
The second column illustrates what lobbyists are attempting to have approved as a standard car title loan rate. This rate of 36% generates $584.89 in total interest costs and monthly payments of $294.65. This is a substantial increase over a standard personal loan. This rate may seem high; however it is much lower than what some car title lenders are offering loans at. At this time it is only a suggestion and not a requirement.
Some car title lenders will charge as high as 300% for a car title loan. This generates over one year a total interest charge of $4,874.09 and monthly payments of $647.19. This is a huge increase and one that many people just cannot afford.
This client may want to aggressively focus on generating tips and also finding a personal loan lender instead of a car title loan at these incredibly high rates of interest to pay his rent at the end of the month. There is much more to come regarding this particular loan and what the client eventually decides to do.
DEFAULT LOAN APPLICATION FOR BORROWER’S INFORMATION
Car Title Loan Amount :: $3,000
Car Title Loan Application and Processing Speed (when do you need the funds):: asap, I want to be able to have the money to pay this months rent and a few other bills that I have
Do you currently have a mortgage? :: no, we rent an apartment. Just moved in and we need next months rent right away
Bank Name and Branch :: Nevada State bank, S Las Vegas Blvd
What City/Town, State and County do you live in? :: Las Vegas, Nevada
What is your employment field? :: Casino
Employment Position :: Blackjack dealer in a local casino
When are you paid? (monthly/weekly/biweekly):: Daily and biweekly, I get a base wage plus I make tips every day I work
Your credit rating to be – excellent, fair, or bad? :: Fair maybe
How did you find us? ::searching for car title loans and loans in general over the net
How are you paid? (direct deposit/paper check):: Cash and Direct Deposit
Gross Amount Per Paycheck ::$560 plus another $20 to $200 a day in tips
Do you agree to have this information published online, without your PRIVATE information of course? :: sue, no problem at all
Extra information here please (some detail):: Our next month’s rent is due in a week and we currently do not have enough money to pay our rent for the apartment we are staying in. We might make it if we get lots of tips this week so we are hustling to make money and pay our rent. We also have some moving bills and we will have to pay our utilities, so the thought was that we would take out a car title loan. We would use all of this money to pay our rent, pay the utilities and pay our moving bills. With the money we make over the next 3 weeks we should be able to repay the loan and also have enough money for the following month.
I know we are on a tight string here, but this is the situation we got ourselves into and must get out of without ending up on the street.
Note to Lender :: Our car is worth about $12,000 from a trade in perspective so it should be sufficient for a car title loan. We do own it and there are no liens on it at this time, so we think that it and us meet all of the conditions for a car title loan. It is in really good condition and a used car salesman confirmed what the Kelly Blue Book told us our car should be worth.
Our credit rating is probably not that great since we have no assets and we have just moved and started new jobs. We are not sure if we could get a personal loan, but felt that his would be a better approach.
Can you advise whether we can be approved for this car title loan in the amount of $3000?
|Category: Car Title Loan||APR 5%||APR 36%||APR 300%|
|Length of Term||1||1||1|
|Amount to be paid||$3,081.23||$3,584.89||$7,874.09|
|Total interest paid||$81.23||$584.89||$4,874.09|
|Paid per installment||$253.25||$294.65||$647.19|
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