Car title loan typically have annual interest rates above 100% and require repayment within the first month. These loans are made for much less than the true value of the car. Title loans are typically given without regard to borrowers' ability to repay or credit history. Because the loans are structured to be repaid in a single balloon payment after a very short term, borrowers frequently cannot pay the full amount due on the maturity date and instead find themselves extending or "rolling over" the loan repeatedly.

In this way, many borrowers pay fees well in excess of the amount they originally borrowed. If the borrower fails to keep up with these recurring payments, the lender may summarily repossess the car, often stripping borrowers of their most valuable possession and only means of transportation and method of getting to work.

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