More Canadians Use High Interest Car Title Loans During Recession – Business News
Photo: The Canadian Press
If internet search trends are a window into the minds of consumers, a recent report suggests that a growing number of Canadians are considering unwise financial options, observers say.
Amid a resurgence of pandemic-related interest in personal finance information, the number of searches involving auto title lending nearly tripled in Canada from March through September this year to 16,900 per month, from about 5,900 searches per month at the same time. times a year earlier, according to SEMrush.
The Boston-based marketing firm that studies internet search trends said Canadian searches for payday loans, meanwhile, fell 43 percent to 22,900 from 39,700 in the same period. , which has been marked by millions of people who have lost their jobs as non-essential stores and industries have been forced to shut down in order to contain the spread of the COVID-19 virus.
“The most surprising thing we have noticed is an increase in demand for auto title loan research which is, I think, quite unique for Canada compared to the United States, where we haven’t seen this guy. increase, ”said Eugene Levin, chief strategy officer for SEMrush, in an interview.
He said he was unsure why searches in the United States had not also increased, but suggested that a possible explanation for the increase in searches for auto title loans and the corresponding decline in loans on auto securities. salary in Canada could be that potential applicants have a car but no job.
“A lot of people have cars,” Levin said. “The terms of these loans are better than payday loans, the interest rates are lower, so they are more attractive. At the same time, you don’t need a job to get an auto title loan like some payday loans do. “
An auto title loan works on the same basis as a home equity loan. They are billed as short-term business, secured by a lien on the vehicle. In the event of non-payment or default by the borrower, the lender can repossess the vehicle in order to recover his money.
Levin said statistics from SEMrush do not indicate how many researchers have actually signed up for a car title loan.
An online search for “car title loan” produces dozens of results.
Most providers offer a wide range of loan levels – one promises $ 1,000 to $ 50,000 – and many say their interest rates are the “lowest in the industry,” from “10 to 49%. “.
The Canadian Press contacted several auto securities lending companies over the story, but no representative was available.
People who are desperate for money will always find someone who is trying to take advantage of their situation, said Brian Betz, advisor for Money Mentors in Calgary, adding that car title loans are just one of many. fast money online programs that they could choose from.
“The increase in securities lending is probably more about those who have no assets. Their cars are for all intents and purposes all they have,” he said.
“Usually when you get a title loan it’s not for $ 300 to $ 500. You get a few thousand dollars on that vehicle and at their interest rates it can be very difficult to pay off. “