Most people look at their budget when taking out a car loan, but what about a short-term auto title loan? Do you consider your monthly bills, household budget and finances when you’re preparing to borrow against the collateral of your car? Most times car title loans are taken when a borrower needs quick cash for unexpected costs or emergencies. This does not leave much time to consider the impact which repaying your loan will have on your bank account and budget. Taking some time to think about whether or not you’ll be able to afford paying back the loan, if it will significantly affect your budget, and what you’ll do if you default on your payments could be the deciding factor in whether or not your budget can survive a car title loan.

Budgeting is not easy for everyone, but most financial professional will agree. Making a budget is one of the best things you can do for yourself and your money. The thought of grouping your expenses may be a bit intimidating, but with time you can see exactly how much you spend, where your money goes, and how much you could be saving. Before you take a car title loan, consider looking at your budget to ensure you can afford to pay your loan. If you have not yet form a budget for your expenses, consider the following steps to help get your finances in order:

1) Save for Retirement – Setting aside some cash for your future has got to be a priority if you want to be able to retire and enjoy the fruits of your labor. Budgeting books and retirement websites can help you know how much you need to save for retirement. Look at your expenses and income and decide how much of your overall income you want to put aside for the future. Consider your age, your portfolio balance if any, and the number of years until you retire. Most financial professionals recommend saving 10%-20% of your gross annual income. Check with your employer’s human resources department about the options of a 410(k) or 403(b). Keep in mind, if you take out a car title loan and choose to pay it back out of your retirement fund, you’ll be penalized.

2) Set a Goal – Make a commitment to set aside part of your monthly income for vacation or emergency situation, or something you want to buy in the future. The main thing is getting into a habit of setting something aside, instead of spending. If you can get yourself in a steady or good routine, you may be able to avoid taking out a car title loan because you’ll already have the cash you need in savings.

3) Track your Expenses – Look at 6 months of bank statements or receipts and add up the amounts. Then divide by 6 to get an average for what you spend every month. This will help you see where your money goes and you will be able to know if you’re living within or above your means. If the average is more than your income, this is a red flag. You’ll need to look at your spending and figure out where you can make cuts. If the average amount is less than what you bring home, you can still make cuts in some spending categories and add to your savings category.

However, if you have any emergency situations or you need some extra cash to pay some bills. Then, car title loan is definitely for you.