"My Title Loan is Killing Me! How Do I Stop Paying 300% APR?"

Jayson Thornton, CFP is an award-winning Financial Advisor and host of Pocket Watching with JT a financial advice podcast and YouTube channel. Below he answers a recent question from a subscriber:

Darnell from Illinois asks: "I borrowed $1,500 on a title loan for an emergency, and 9 months later, I've paid over $4,000 in fees and still owe the principal. I make $3,500 a month, my expenses are $3,450, and I have zero savings. I have $18,000 in student loans, and I'm terrified they're going to repossess my car. What should I do next?"

JT: Darnell, I need you to take a deep breath. First, let's call that title loan what it is: a financial emergency on top of your original emergency. You've got a money monster with 300% interest teeth threatening to take your transportation, which would put your entire livelihood at risk. I salute you for confronting this because you have already paid more than the principal, and that is a major red flag.

Before we talk about your $18,000 in student loans or even your long-term budget, you have to stabilize your current crisis using the Pocket Watcher's Seven Money Rules. We're going to use the first three steps to create an Immediate Action Plan to get your car title back.

Phase 1: Budgeting (Rule #1) - Find the Debt Fuel

You're telling me you make $3,500 and your expenses are $3,450, leaving you with a paper-thin $50 buffer. The fact that you have zero savings tells me you don't actually have a $50 buffer; you are already leaking cash somewhere, and we need to find the leak immediately.

Your immediate goal, Darnell, is to free up enough money this month to put toward that title loan, treating it like a financial bomb.

• Create Your Scorecard: List every single expense from the last 30 days. And I mean everything—from the rent to the last $5 fast food purchase.

• Find the "Want Money": Since you are barely breaking even, your first move is to find all your discretionary, non-essential spending. We are calling this the "Want Money," and this is the easiest place to find extra cash to use as Debt Fuel. You are going on a financial lockdown until this loan is gone. You to cut out at least a couple hundred dollars of non-necessities from your budget.

Phase 2: Emergency Savings (Rule #2) - The Debt Spiral Guardrail

This is not the time to build a 3 to 6-month fully-funded emergency fund; that comes later. Right now, you need to build a small, fast, immediate Guardrail to stop this title loan from forcing you into even more debt or, worse, losing your car.

• Borrow from Yourself: Use the "Want Money" you just freed up from the budget (Phase 1) to start building a mini-emergency fund (maybe $500 to $1,000) that is just for surviving the next few weeks and eliminating the title loan.

  
  

• Alternative Payoff Options: Since time is a factor, you need to explore a refinancing option that is not another predatory loan.

• Personal Loan: Apply for a small unsecured personal loan, perhaps from a credit union, to pay off the title loan principal. Even a high interest personal loan is better than 300% APR.

• Temporary Side Gig: Get aggressive. Can you drive for a ride-share on the weekend, or take on a temporary side job to pay off the principal in one lump sum?

• Negotiate: Call the title loan company and attempt to renegotiate the terms or ask for the final payoff amount. Be ready to explain your hardship.

Phase 3: Debt Planning (Rule #3) - Kill the Monster

Once you have the money to pay off the title loan's principal, you must eliminate it immediately. The goal here is to remove that dangerous, high-interest debt that is taking your car as collateral.

• The Focus: The title loan is your absolute financial priority. You must focus every spare dollar (your Debt Fuel) on this debt until it is gone. Your $18,000 student loan is an anchor, but this title loan is a burning fire. You deal with the fire first.

• Avoid the Roll-Over: Do not roll the title loan over into a new one. This is how the lender traps you with more fees and keeps you in the cycle.

• After the Title Loan: Once the title loan is paid off, you have won a major victory and removed the threat of repossession. You then immediately move the Debt Fuel you used on the title loan and start attacking your other debt, likely using the Debt Snowball method for psychological wins.

  
  

You are in control, Darnell. Financial freedom is not about making one big transaction. It's about building new money habits, and watching your pockets. Your next step is to go to www.PocketWatcher.net and follow the Pocket Watcher 7 Money Rules!

About

Jayson Thornton, CFP is the founder of Thornton Financial and host of Pocket Watching with JT where he answers your financial questions. To learn more or submit a finance question go to www.PocketWatcher.net.

For press inquiries, contact Jayson Thornton, CFP at PocketWatcherJT@gmail.com or 314-776-9076.