Car title loans are a quick way to lose your car (and your shirt).

Cousins to paycheck loans, so-called “car title loans” are short term high interest loans secured by the title to your paid off used car. They are available in about half the states (sometimes unregulated), and they often put the borrower into a hole they cannot get out of without losing their car.

Loans usually work like this: You give your car title and a copy of your keys to the lender who gives you a loan for up to one half the car’ current value. You agree to repay the loan — usually in a month or two — along with annual interest that often goes into triple digits (that’s more than 100%) and fees. If you fall behind, you may come out one morning and fine your car missing (you gave them a copy of your keys to make repossessions simpler for them).

Associated Press reported on one couple that borrowed $800 on a car title loan, made three payments totaling $533, and still owe more than $900. They are paying $240 a month now, of which $200 goes to interest. If they pay the loan off they will have given up $5,000 on a $1,300 car.

Don’t do this if you can avoid it.

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