5 Things to Know About Title Loans in Charlotte, NC

If you live in Charlotte, own your car and need money quickly, you might be tempted to take out a title loan.

Title loans are risky, high-interest loans that don’t require a credit check and use your car’s title to secure the loan, and they’re illegal in North Carolina. Still, many out-of-state lenders advertise to North Carolina residents.1

For residents in and around Mecklenburg County, exploring secured personal loans in Charlotte, NC, may be a less risky option than crossing the state line to South Carolina for a title loan. A secured personal loan uses your car as collateral, which is something valuable you use to back the loan.

Secured personal loans may sound like title loans on the surface, but they’re different in important ways. Here’s how:

1. Title loans come with very short repayment terms
Title loans often come with short repayment periods –– typically between 15 and 30 days –– which can make it difficult for some borrowers to repay them on time. If you can’t repay, the title lender may let you roll over your balance into a new loan, with additional fees, or repossess your vehicle.

A secured personal loan, on the other hand, typically gives you up to 5 years — or sometimes more — to repay. And, unlike most title loans, you don’t have to repay the full amount at once. Instead, you repay it in predictable monthly installments for a set period of time.

2. Using your car’s title as collateral is not the same as using your car as collateral

With a secured personal loan, your car’s title stays in your name unless you’re unable to repay the loan. In contrast, many title lenders ask you to transfer your car’s title and provide a set of car keys as soon as you take out the loan. Some title lenders also require you to put a GPS tracking device or starter interruption device in the car.

3. Title loans are more expensive than secured personal loans
Title loan contracts often include surprising details. Missed payment penalties may be larger than you’d expect, or you might be required to pay for add-ons like a roadside service plan.

What’s more, many title loan lenders charge more in interest and fees than the original amount of the loan. The interest rates can reach triple digits, and lenders may tack on monthly service fees as high as 25%.2,3

Secured personal loans may charge late penalties as well, but their interest rates are typically much, much lower: often between 6% and 36%4

4. Over half of title loan borrowers can’t make payments on time
Title loan lenders base the loan amount they’ll give you on your car’s value, not your ability to repay it. Relaxed eligibility requirements may seem appealing, but they make it difficult for the lender to determine if you can really afford the loan.

In fact, 64.5% of borrowers are unable to make their title loan payments. If you’re one of them, you could face consequences such as being sued for the debt, having your wages garnished or losing your car.5

Secured personal loans offer longer repayment terms and much lower interest rates, which often make them significantly more manageable than a title loan.

5. You have other options
You don’t have to accept unfair loan terms, even if you need money quickly or have less-than-perfect credit.

Some companies offering personal loans in Charlotte work with borrowers with a wide range of credit scores to find a loan that’s right for them. They may even offer approval in as little as one day — without the steep fees and interest rates you’ll find with title loans.