Car Title Loans - Personal Finance Tips | Federal Trade Commission
This video shows what happens if you borrow money in exchange for your car title.
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Transcript:
Albert needed some extra money to pay his bills this month. He saw an ad on TV that said you can get a loan if you own a car. So he went to a local shop that advertised car title loans.
Albert filled out an application. Then he showed the lender his car and the title to his car. The lender gave Albert one thousand dollars, but he kept the title to Albert's car. In 30 days, Albert had to repay the $1,000 he borrowed, plus a fee of $250 to get his car title back.
But a month later, Albert didn't have the money he owed, so the lender gave Albert more time to repay the loan. But Albert would have to pay another fee of $250. Another month past. Albert now owed $1,500, but he still couldn't repay the loan. This time the lender didn't give Albert more time to pay back the loan. Instead, the lender sold Albert's car and kept the money.
Albert lost his car and his transportation. He knew it would take a long time to save enough money to buy another car. And he also knew he would never get a car title loan again.
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