How to Choose the Right Short-Term Lender

… and How to Recognize Shady Lending Practices

If you need money fast, say for your struggling business or a family emergency — your desperation may make you vulnerable to shady lending practices. If you fall prey to these unethical tactics, you may find yourself with a loan you can’t pay back, and your credit destroyed.

Those who are a bit skeptical of the “get cash now” industry have a right to feel that way because unfortunately, what sometimes accompanies offers of same-day cash are unlawful practices.

Recently, a short-term lender was ordered by the CFPB (Consumer Financial Protection Bureau) to pay back consumers to the tune of over $44 million because of illegal debt collection practices. (source)

Sadly, lenders like these give reputable companies like ours a bad name. But we are committed to showing our customers a different way. Our practices are, have always been, and will continue to be lawful, ethical, and customer-focused. Our goal is to set our customers up for success — not to give them a loan they can’t repay.

Even when customers default on their loans, we do our best to find a solution that will enable them to repay their loans. And no matter what the outcome, we treat our customers with the care, dignity, and respect they deserve.

How to Choose the Right Short-Term Lender

There are several different types of short-term loans. We specialize in auto title loans. Title loans are short-term, small loans ($3K to $15K) that use your car’s title as collateral. (You are able to continue driving your car throughout the term of the loan.)

Here are some red flags to look out for when you’re shopping for a short-term loan:

1. Credit Score

You may not want to hear this, but if you have bad credit, and you’re being offered a short-term loan anyway, that could be a red flag that you’re getting yourself into a potentially devastating financial situation.

When you apply for a title loan with California Auto Finance, we not only take into account your credit score, but also your job, income, and the value of your vehicle. All our customers may not have good credit, but as we set them up for success, they’re able to repay their loan, improve their good credit, and qualify for more (or larger) loans in the future!

2. Interest Rates

It’s not uncommon in our industry for short-term loans to have APRs (annual percentage rates) of 100%. But we’ve even heard of companies whose APRs are 300%!

Our APR can be as low as 36%, which comes out to a monthly rate of only 3%. This is practically unheard of in our industry.

3. Prepayment Penalties

Repaying your loan before the deadline is a good thing, right? Not so fast. If you wish to repay your loan early, some lenders will ask you to refinance, keeping you in debt longer. Or they may charge you a penalty (because they won’t be accruing interest any longer). We have no prepayment penalties at California Auto Finance.

4. Default Options

A disreputable lender will not be willing to negotiate options if you default on your loan.

At California Auto Finance, we try to be understanding and flexible with our customers’ needs, always working toward our goal of helping them successfully repay their loans. We’ll work with you to develop a payment plan that works for you. Read about how to avoid defaulting on your loan here.

5. How Your Information is Handled

Our online application process is free, quick, and easy — and we promise to keep your information protected. We will service your loan throughout the duration of the contract and will never sell your loan to another lender.

Whatever short-term lender you choose, be selective and careful. Ask questions and watch out for these signs of shady lending practices. Please call us with any questions you have about California Auto Finance!

(featured image: Steve Troughton,