There are some signs that you should watch out for, as you get your car title loan, in order to avoid getting scammed. Below you can find some of the things that should raise a red flag if you are about to get a car title loan.
1. Know Your Credit Score
Find out what your credit score is before you even enquire about the loan. This is important because at times, especially for an unsecured loan, the car title lender may use your credit score to decide at what rate you will pay interest.
If you don’t know what your score is, the lender might use a much lower credit score than you actually have and therefore charge you more interest on the car title loan.
2. Fees
If you are asked to make payments for fees, or to pay a down payment, then you should be suspicious. Most honest lenders will ask you to fill in an application form which usually has a nominal fee, and not any other fees, which will determine if you get the loan or not.
3. Background Check
Make sure that you are handing your information to a legitimate lender. Before you decide to hand over your personal details to a lender for your car title loan, ensure that the lender is running a legitimate business. Go to your local consumer protection bureau and find out more about them or do a thorough online search and read reviews.
For example, if you are looking for car title loans in San Jose, try and find out more about them. Find out what other local clients say about them and for how long they have done business in the area.
Doing your due diligence is important because many identity theft scams require you to hand over your personal details such as I.D/ social security number, address and phone numbers, just like legitimate lending businesses do.
4. Guarantors
If your car title loan lender asks you to get a co-signor for your loan or, even worse, gives you a co-signor, you are likely about to get scammed.
Unethical lenders will try and give you all sorts of reasons how it is standard procedure to have a co-signor/guarantor or how they need the credentials of someone who they can refer to incase you can’t be found or you disappear.
Whatever you do, ensure that the lender does not put distance between your loan documents and ownership of your car by not including your name in the forms.
5. Changing Terms
An unscrupulous lender will seek to change your agreement even after you have agreed upon and signed terms. For example, the lender could grant you the loan then later on call you back and tell you that your credit score is much lower than was anticipated and that you cannot get the loan unless you renegotiate terms. You might also be asked to return any money you have borrowed immediately.
If such a thing happens, you are most likely about to get scammed and you should be wary. Watch out for any high pressure tactics that are used on you.
All in all, do not let your desperation make you let down your guard and make poor decisions. It is important to try and be reasonable and realistic and if you cannot, try and get a close friend to go along with you and help you. In any case, if you are suspicious of a situation, walk away.
David Schmidt is finance professional with extensive knowledge of credit products. After 12 years working in the banking sector, David went into private business as a lender and credit consultant in the San Jose area. His business offers credit facilities such as car title loans in San Jose. Visit his website to learn more.
