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Car Title Loans For Debt ReductionDebt consolidation reduces interest rates and monthly payments. Several methods of funding debt consolidation exist, including a car title loan. Title loans, although used less frequently than home equity products to elminate debt from credit cards, can provide the secured funds needed for debt relief. They enable the debtor to simplify his life by only having one credit payment every month. Credit card debt consolidation with a car title loan provides a borrower money in exchange for an automobile title and an extra set of keys as collateral. Lenders often require borrowers to have free and clear title to the automobile before providing a loan. The lender dictates the loan amount, based on the vehicle's value. Title loans carry interest rates near 25 percent for 30 days. If the borrower is unable to pay off the loan after 30 days, the balance rolls with the same interest. The possible car loss makes these loans risky for borrowers. A normal car title loan entails a triple-digit annual interest rate and lenders require payment within one month. The loan amount is for much less than the value of the automobile. Several different types of lenders offer car title loans, including pawnshops. Although the risk-reward factor doesn't favor borrowers, this method of credit card debt consolidation can yield benefits. If the borrower wants to pay off a small amount of debt, less than $5,000, and will almost certainly be able to pay back the loan, then a car title loan may be a good option. Credit card debt consolidation with a title loan often occurs for consumers with poor credit history, unable to obtain a personal loan. If borrowers can pay back the title loan, then they are better off paying the creditors directly instead of risking their car. About the Author
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