3 Things You Shouldnt Do In the Recession

We have all experienced some form of financial stress at one time or another. This current recession we are in has effected more people in this generation than some have ever seen. When times get tough, you may be tempted to do 1 of these 3 short term fixes, however these can cause much more harm than help.

1. Use your car title to get a loan.
That beat up Honda that you drive every day to work has been paid off for years, and you have been holding on to the title of the car. You may have lost your job, or in a tight bind for money, and believe that taking out a title car loan will help you out. After all, how valuable is the title to a car anyway?

The answer is very. Using the title to your car as collateral for a high interest loan is playing Russian roulette with your transportation. Unlike a traditional auto lender, many of these companies won’t allow you to fall behind before deciding to pick up that car they already have the title for. Then you are not only stuck without a ride, but still are responsible for a high interest loan.

2. Take excessive cash advances on your credit card.
While you may think to use your mastercard to pay the mortgage or take care of an unexpected bill, don’t do a cash advance. Most credit card companies charge a much different(and higher) interest rate for advances. YB has researched the average credit card purchase rate is currently 14%, while companies charge nearly 22% for taking cash advances.

3. Pay Day Loans.
This one should be the most obvious, but judging by the recent reports in the news, it might not be. The 42 billion dollar payday loan industry doesn’t seem to be slowing down anytime soon, and you don’t want to become apart of a growing number of Americans turning to this option if you don’t have to. While terms of loans vary for lenders by state to state, you may look to borrow $300 due to an emergency that you have to pay. That same $300 you borrowed will now cost you $345 in two weeks, which equates to nearly 450 percent annual interest if you keep re-loaning. While these predatory loans have become hot topic on Capitol Hill in recent months, until they are outlawed, stay away!

Tagged as: the recession