For many people, the only time they look at their budget is when they are getting ready to make a large purchase. When thinking about buying a car, for example, we take a look at the budget to see how much we can afford. Budgeting is not easy, and many have a problem staying within their financial means, but what many of us don’t do is consider the budget when taking out a loan. A car title loan is a quick and easy way to borrow money. Regardless of the type of loan, though, it is important to take a look at your budget and determine whether or not you have the means to pay it back.
Before taking out a car title loan, consider the following:
- Be sure to save for retirement. Saving for the future must be a priority. Pay yourself first is a sound financial motto and can be achieved easily by setting aside a certain percentage of each paycheck and putting it into a retirement account. The amount is taken out of your paycheck before you even see it. If you have a 401k or 403b plan, the money automatically goes into your account. It is possible to borrow from this account, but only with a penalty. If you take out a car title loan, do not pay it back by borrowing from your retirement account.
- Track your expenses. Take a look at your past six months. Examine your bank statements as well as your receipts for all of your purchases. Figure out exactly what you spend per month. If you are spending more than what is coming in, you need to find out where you can cut spending. You may even have to consider how to earn more money. If you are spending more than you are earning, think how you would manage to repay a car title loan.
- Set clear financial goals. Make a commitment to establishing an emergency fund. The account should be built up to include roughly six months’ worth of expenses. Having such a fund may allow you to avoid having to take out a car title loan. At the very least, it will give you the resources to pay back an auto title loan should you need to use that alternative.
Embassy Loans is a well-respected consumer finance company that has helped tens of thousands of customers manage their financial situations using car title loans.