Everyone loves to bash the title loan companies every time something does not go well. Every time legislatures get a chance, many try to ban the practice of doing title loans. Many of our legislators try to minimize what fees and interest rates these services are able to charge, to the point that in many states the services have simply had to shut down due to the inability to run a small business that makes enough profit to even keep the doors open.

What legislators, and all state representatives, as well as the general public need to understand is just how high the risk of lending small amounts of money to folks whom quite often have terrible credit, and can't even so much as borrow from friends or relatives is.

Title loans absolutely are a last result for most consumers. These loans are to try to dig a consumer out of a bad financial crisis. The default rate is very high. While much of the public, as well as government leaders must realize, is that these small lenders have no choice but to charge high rates to cover the costs associated with loans that go into default.

It is true the fact that in some cases the lender simply takes the borrowers vehicle, and re-sales it for more money that was initially owed on the loan. But what many do not realize is the inherent cost of getting these vehicles repossessed, on the market, and sold.

The what title loan companies refer to as the exit strategy on loans that have gone into default can be quite an expensive proposition, not to mention that the entire process can minimize, and at times nearly deplete the small lenders operating capital.

Many times these lenders wind up with a complete loss. There are many situations where after lending money on a customer's vehicle, the vehicle becomes inoperable, and can cost many times what the cars value is to be fixed. Often when this happens, borrowers simply don't pay off the loan, allow the lender to repossess the vehicle, and then the lender is stuck with a complete loss.

Also, there are ever-growing black markets of title fraud. Titles to vehicles can get messed up much the same as title to real estate. There are many fraudsters out there that run scams targeting these small lenders where they take a vehicle, tamper with the title to make it appear as a clean title, and then purposely default on the loan. Then when the lender attempts to repossess the vehicle, and resale it, only then do they find that there is a cloud on the title, and that they don't have a clear title to the vehicle, and wind up loosing out completely.

So as you can clearly see, the lenders side of the business is not all sunshine and lollipops, or guys getting rich off the backs of folks in need.

Many of these title loan companies go broke from all these problems, and yes a handful do make a decent living offering these services, but they are willing to put in the work, and take the huge risks involved with offering these services to people needing it.