Car title loans are a tricky route to go down, no matter how you cut it, and are considered to be potentially dangerous in most cases.

Essentially, the way it works is this:  you go in to a localized store (which may either be independently owned or serve as part of a larger whole, existing on either a state or national level) with your car title.  Then, based on how much your car is worth, you’ll receive a loan from the company.

Standard loaning procedures then apply (and if they don’t, you’re certainly in trouble).  You’re required to make monthly (at least) payments to pay off the loan.  Furthermore, an APR or other form of interest rate is applied to the loan.

Typically speaking, these loans have higher interest rates, to entice you to pay it back faster and, in the event that you don’t, causing the company to profit even more greatly off of you.

On top of that there are several looming catches to watch out for.  For example, these companies typically guarantee cash will be in your possession that very day.  This makes them highly appealing, especially to someone who’s in a real pinch.

But remember that when you walk in, you’re potentially signing away your car.  If you don’t meet the requirements of your agreement, the company has the right to repossess your vehicle, which could be devastating.

Of course, that means the ball is in your court—if you’re in a total bind and need a small to moderate amount of cash quickly (most frequently, these companies are going to offer you between 20-50% of what your car is worth—rarely will they go above about $2,000 but they may, depending on the situation) then this is an effective way of getting that cash, while avoiding the bank.

Let’s say that your credit is sub-par or poor, odds are you aren’t going to be able to even get a loan from the bank in the first place.  Thus, it might be imperative to take advantage of a car title loan company.

But realize that several things come with that.

As mentioned, if you fail to make a payment, even just one, it’s entirely possible that they’ll try to (and succeed at) repossessing your vehicle.  This means that if you still owe car payments, you’ll still have to pay them even though you no longer own your car.

There’s an advantage though—if you really only need money quickly but are going to have that money come back in the near future (in other words, having a cash flow problem) it might not be a bad approach.  You’ll have the money that same day and (ideally) you’ll be able to pay the loan off right away, or (if you don’t mind the high interest rate) whatever pace you might need to.

However, before taking one of these loans, you should assess your situation—what is it that you need the loan for?  How dire of a situation is it?

It might be worth weighing your options first.  If you need money for something small or trivial, it might be a better situation to take a hit such as a late fee or a flat-rate fee than to take out such a risky loan.

For example, if you’re in good standing with, say, your electric bills, credit cards, and so on, one late payment isn’t going to ruin your life, whereas taking out a risky loan might.

If you need it for something bigger and more pressing, you need to evaluate whether or not it’s worth the risk.  If you really know what you’re doing and are confident you can pay back the loan at least as quickly as they ask (if not much, much faster) then that eliminates most of the risk associated with car title loans.

Although they’re theoretically helpful, getting a car title loan can be a potentially difficult thing.