A title loan can give you a bailout, but misusing it can likewise trap you in a vicious cycle of debt. The worst part is you might still lose your vehicle in the end. While it’s the risk you have to take, your title loan application doesn’t have to lead to repossession. To protect yourself against the possible negatives of title loans, consider doing the following:
Apply for an Unsecured Loan Instead
Unlike signature loan providers, title lenders feel more comfortable approving larger loans because they have insurance against non-payment: the vehicle. While this is generally true, a title loan might not even be what you need in the first place. Borrowing a smaller amount of money without any security is always better than loaning a bigger sum secured by an expensive asset. If you can get the cash you need in good faith, then don’t use your vehicle’s title to loan more money unnecessarily.
Don’t Borrow More than You Can Pay
Simply because you can borrow a certain amount of cash doesn’t mean you should max out. It’s important to have enough cash, but borrowing more than what you can pay realistically over a particular period is going to bury you in debt.
Although it’s easy to understand how title loans in Utah work, contracts can be hard to comprehend. If there’s something you don’t get, don’t be afraid to ask. If you sign the contract without fully knowing what it says, you might not win any disputes later on.
Read the Fine Print
Speaking of understanding the title loan contract, make sure to read it word for word. Take your time to review it, and don’t rely on promises alone. Written contracts are legally binding, but verbal agreements are not. If what the contract says is out of tune with what was told to you, clarify the miscommunication first.
A title loan can be helpful if you use it responsibly. It’s not without downsides, but you can enjoy its positives without dealing with its negatives if you do due diligence.