Let's face it; car title loans have caused some major damage in people's budgets. In some cases, they have been downright disastrous for people's finances. The car title loan provides an easy opportunity for cash through the equity in a vehicle, but the payoff is trouble for those who do not plan for it.

There are positives and negatives to car title loans:

How are car title loans good?

*No credit check loans

*Based on the value of your car not your income

*Money as fast as an hour

*No penalty for early payoff

The bad parts of a car title loan only arise when they are not paid off right away. The high interest rate makes title loans difficult to pay off when turned into long-term debt. Those who default on their loan will also risk losing their car. The pink slip of the vehicle is collateral for the loan. As with banks, car title loan lenders will take the collateral in order to use it to pay off the defaulted loan.

So how does one go from benefiting from all the good which can come out of a car title loan to losing their vehicle? The only way to go from one extreme to another is by not paying towards the loan. Most lenders will take small payments, fees only or allow paying down a debt when the full payment is too much to pay all at once.

Make a payment plan. The loan will give you a good portion of the value of your vehicle. When taking care of your financial emergency, you also need to have some sort of plan to pay the money back. A title loan will carry a high interest rate which will make long-term payments a burden on your income. The first payment will usually take place about 30 days after you receive the loan. This gives most people a few paychecks to budget the payoff. Take that month and crunch your expenses. Pay the minimums and go without some extras in order to scrape together as much if not all of your payoff. The more you pay back, the less interest which you will have to pay. One great aspect to these loans is that you get to keep the car used as collateral. Your everyday life will remain as is to keep your focus on the task of paying off the loan.

If you have to extend the loan, do some extreme budgeting. See what you may be able to do for some side jobs, ask for extra hours at work, or sell some unneeded items in a garage sale. If you budget money towards eating out or other entertainment, that can be used to pay down the loan. Whatever you do, make some sort of payment when one is due. Late and no payments will subject you to more fees and with some car title loan companies, a reason to repossess your vehicle. Most reasonable companies will not take your vehicle right away, but the better you communicate and make efforts to pay will stand in your favor for the secured loan.

When taking out a short-term loan, it is best to only take the least amount possible. Some people suggest that you take additional money to help with other bills along the way, but since this extra money is not free it serves no purpose to make your repayment any more burdensome than what it already is. You will pay a fee for the amount of your loan. you will be paying interest on every dollar not paid back on time. Taking out any extra than what is needed is not going to benefit you in the long run.