When folks think of car title loans, similar to payday loans, there tends to be certain market stereotypes which come to mind. Most people would assimilate a title loan along with large metropolitan regions focusing within on the low income areas.
In 2005, there was a study done in Cook County Illinois to gather as much feasible information on car title loans based on public information. Chicago is located in Cook Region and naming the city gives a readers a better idea on the demographic area represented in the study. There were forget about recent findings posted, but understanding how today’s society has people living paycheck to paycheck and transporting much larger debt figured, one can only imagine the increase in numbers for that following tidbits of information.
*There were 260 storefronts located in Illinois. These types of stores were run by 63 different title loan companies. Chicago is really a major metropolitan area with considerable public transportation opportunities. The bus and train systems set up in cities like Chicago have been helping residents meander throughout the city and surrounding communities. It is interesting how that actually within this metropolitan region, so many name loan companies not only exist, but thrive.
*The median (average) loan with this area in 2005 was $1500. The median finance charge had been $1536 with an average APR of 256%. It isn’t surprising to me that people were paying more in financial charges than they were loaned. In the event that paid off on the original due date, typical loans would charge 25% curiosity and the full payment would be $1875 rather than $3036. Extending a title loan will prove to be quite pricey in 2013 as well.
*The higher cost of these loans was due to people only paying fees every month and not paying down the actual principle. Within 2005, 21% of loans were taken out to payoff past financial loans. This “cycle of debt” is constantly on the thrive within problematic finances and short-term loans are often used frequently in order to payoff previous ones. Whether taking out a payday loan or car title loan, a borrower will want to possess a plan to pay off the debt in a sensible amount of time to keep the final cost of the loan from skyrocketing.
*Sadly, within 2005, 18% of car name loans resulted in the vehicle being accepted as collateral for a defaulted loan. Residing in Cook County, residents at least a new supportive public transportation system to help support the loss of a vehicle. Those living in smaller areas will end up spending more for taxis or lose jobs and educational opportunities due to lack of transportation.
*If a person was brought to court due to the defaulted loan, the median cost of damages owed was more than 3 times the initial loan amount. Among principle balance, fees, interest plus court costs, a short-term loan turned out to be quite damaging.
*Most debtors often failed to report to court in 2005 which automatically resulted in a default judgment against them.
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Show up to your court date no matter what in order to have even a small chance of any leniency in your case.
I share these types of facts of 2005 as simply a reminder that car title financial loans have remained quite similar to years of past. Fees, interest and process of debt continue to occur. Exactly what has now changed is the opportunity for a lot more business to open new store areas as well as offer online title financial loans as well. As with any type of third party money, you will want to have a payoff plan to avoid falling into any kind of long-term financial debt.