Auto title loans are high-cost ways to borrow small amounts of money for a short time, using your paid-off car as collateral.

They should be avoided because not only are they extremely expensive, they are dangerous.

Here's how they work:

You go to an auto title lending company with the title to your car in hand. They will determine the fair market value of your car. You can borrow a percentage of that amount, which varies by state.

The interest rate on a 30-day loan is usually 25%, which adds up to 300% a year. Say you borrow $600. You would pay $150 in interest the first month, so now you owe $750. If you can't repay the $750 within 30 days, the lender will roll over your loan for another 30 days and add another 25% in interest charges, making your new balance $937.

A lender can roll over your loan six times. If you haven't paid back the loan in full at the end of six months, your car will be repossessed and sold as repayment for the loan.

A car title loan is actually more dangerous than a payday loan simply because your car is at stake. If it's seized, you lose a valuable asset. You also will lose your transportation to work, school and the grocery store.

If you need cash right now, here are some alternatives to auto title loans.