Pawn shops can be an alternative to typical title lenders when shopping for a title loan.
However, there is one notable difference. When you get a title loan from a pawn shop, it's referred to as a title pawn.
This is because there's a chance that you will have to leave your vehicle at the pawn shop until the loan is paid back in full. This differs from a traditional title loan business, where you can get a loan and still drive your car.
If you’re considering a title pawn, it’s important to do your research and understand the terms of the loan. Title pawns and traditional title loans vary when it comes to interest rates. On average, most title loans charge 25% interest per month, which could possibly result in a 300% APR for the year.
Hopefully, a pawn shop keeping your car will give you the incentive you need to pay off your loan sooner rather than later. Title pawns can be expensive and risky. You could lose your ride and maybe even see someone in your neighborhood driving your car around. Not cool. 🤬
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Like you would with any loan, budget for what you need and only borrow what you can reasonably pay back.