Financial Advice By: Carmen Wong Ulrich
Q: I’m thinking about getting a loan from one of those title companies that advertise on TV. The ads say I can use my car title and get automatically approved. Are these legitimate lenders and would you recommend them? I will repay the full amount as soon as I am working again to avoid so much interest.
A: This one is an easy answer: NO WAY! Why? Super high interest rates that could be on par with a payday loan. Borrowing that pricey means keeping you in debt, possibly just to keep up with payments. Fix what’s really wrong here. Are you out of work or maybe just over burdened with other loans? If you’ve got lots of debt, first head over to an NFCC.org office near you, which is run by nonprofit credit counselors. For a small initial fee (they don’t make money off of you), they can give you a solid assessment of where you’re at credit-wise and what lenders you should avoid. They can also help you with a debt management plan that not only gets you out of the red for good, but improves your credit, so you don’t have to borrow at such a high interest rate. If you’re just in a tight spot income-wise and you need cash, look instead to make more money either by taking on a part-time job or being creative such as listing yourself as a “TaskRabbit” by the hour or by the task. Also, make sure your budget is cut as far as it can go before you borrow. Buy nothing but essentials. And don’t forget about your local community banks or credit unions; they’re more likely to have lower rates and loans that won’t keep you on a borrowing spiral.
About the writer: Carmen Wong Ulrich is the co-Founder and former President of ALTA Wealth Management and a Professor in NYU PolyTech‘s school of Finance and Risk Engineering. She is an author and the former host and co-creator of CNBC‘s “On the Money,” and currently the money advice columnist for Good Housekeeping, a contributor to MSNBC and CNN as well as a frequent expert guest on ABC’s “The View.”