Still paying for a car title loan? Here’s how to get $4,000 to pay it off

Still paying for a car title loan? Here’s how to get $4,000 to pay it off

When Rakesha Hill’s car broke down, she didn’t have $700 laying around to pay a mechanic. The Mesa mother of three earns a modest salary working for a charity that helps homeless families.

Hill, 39, discovered what many consumers do. The interest rate was so high, she had trouble paying off the loan.

Title loans are a common option

Four in 10 Americans said they would have trouble covering a surprise $400 expense, according to a Federal Reserve study last year. A survey estimated roughly two in 10 adults have no emergency savings at all.

But interest rates on title loans can be huge, adding up to 204 percent annually, according to the Consumer Federation of America and the Southwest Center for Economic Integrity.

People ount they borrowed without getting nearer to satisfying the loan. And if a borrower defaults, the lender can repossess the vehicle and charge extra fees.

Program lends a hand to borrowers

The program, called Lend a Hand, allows qualified Maricopa County residents to borrow up to $4,000 from MariSol Federal Credit Union to pay off a title loan.

The annual interest rate for the new loan, at 15 percent, is much lower than most title loans. Participants also can receive debt counseling from a erica, and set up a savings plan so they can get back on track to financial health.

“(The loan) was so affordable, I was able to pay it off in six months,” Hill said. “Had it not been for the program, I would still be paying (the title loan) off now or would have had my car repossessed.”

Some not happy with the program

People with multiple title loans or who are in extreme debt most likely won’t be approved for the loan, MariSol Federal Credit Union CEO Robin Romano said.

“It’s an excellent tool for those in the early stages of being trapped,” she said. “The vast majority of people we have to decline . they owe so much more than they can pay back, it’s http://paydayloanstennessee.com/cities/tullahoma like putting a Band-Aid on a gushing wound.”

“Take the first step and apply. It doesn’t hurt to go through the counseling, and it doesn’t hurt for us to take a look,” she said.

After he applied for the Lend a Hand program, he said he felt pressured to accept the Take Charge America debt plan even though he was not approved for the MariSol Federal Credit Union loan.

The organizations said they will review their application materials and interactions with consumers to improve communication about the two s.

How the program works

The Phoenix nonprofit can create a monthly budget based on the applicant’s debts and negotiate with creditors to lower interest rates and monthly payments, waive late fees, shorten the pay-off date and stop collection calls. Take Charge America then takes a small fee from the monthly payments.

Consumers are not required to accept Take Charge America’s debt-management plan in order to receive the loan from MariSol Federal Credit Union.

Within a few days of submitting the Lend a Hand application, consumers should also hear from MariSol Federal Credit Union. The credit union may ask for more information to complete its loan review. Afterward, it will notify the applicant whether the loan has been approved.

If the loan is approved, the borrower must open an account with MariSol Federal Credit Union, begin making payments on the new loan and save a small amount of money each month.

‘Get out of the vicious cycle’

The Lend a Hand program aims to get participants out of the trap of an existing title loan, as well as helps them avoid seeking one in the future, according to program advocates.

“Sometimes people think their only option is to go to Tio Rico or TitleMax,” Romano said. “Anytime that we can help people see another way to do something is a good thing.”

When Hill faced another financial emergency recently, she didn’t go to a title lender. Instead, she asked MariSol Federal Credit Union to tide her over.

She has continued to bank at the credit union since completing the Lend a Hand program. The credit union approved a loan at a lower rate than a title loan.

“ily,” Hill said. If consumers are “looking for a place where they can save money and get out of the vicious cycle of the title loan, I would recommend the program.”

How it works

If you have a car title loan, you could be eligible to pay it off by borrowing up to $4,000 at a 15 percent annual interest rate from MariSol Federal Credit Union through the Lend a Hand program.

1. Download an application and review the eligibility requirements at Or download the application here in English or in Espanol.

2. Contact Take Charge America to schedule a free credit counseling session. A credit counselor will offer to help you develop a budget and create an action plan to eliminate debt and save for the future.

  • By phone: 1-877-822-2410.
  • In person: 8 a.m.-5 p.m. Monday-Friday at 20620 N. 19th Ave., Phoenix.
  • By email:
  • By fax: 623-266-6666.
  • By mail: 20620 N. 19th Ave., Phoenix, AZ 85027.
  • If you are approved, the credit union will pay off your title loan and work with you to set up monthly payments on the credit-union loan. You also will be asked to open a MariSol Federal Credit Union savings account with an initial deposit of $25 plus $10 per month to build an emergency fund.

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