That’s the initial $800 loan plus the 25% interest, which amounts to $200. At 30 days, you would owe a total of $1,000. To illustrate, let's use the prior example of an $800 loan with 25% interest over an initial 30-day term. This will add even more interest and fees to your balance. If you can't repay a title loan before the loan term ends, the lender may let you roll the loan over into a new loan. Unfortunately, this extraordinarily high APR is normal for title loans. For example, for an $800 loan at 25% interest over a 30-day term, the APR would be 25% x 12 months = 300%. So to get the APR, you have to multiply the interest rate over a year’s time. Title loans have short terms, often only 15-30 days. This interest rate isn’t the same as the annual percentage rate (APR). Title Loan Interest RatesĬar title loans typically have a very high interest rate. After the new loan is approved, the lender keeps the vehicle's title until the loan, interest, and any document or processing fees are paid off. Borrowers must also show their photo ID, proof of auto insurance, and sometimes proof of income. There is usually no credit check, but the title loan company must actually see the vehicle in person. There also can't be any liens on the title. To qualify for a car title loan, the borrower must either own the vehicle outright or owe very little on it. Rolling over a previous title loan into a new loan takes even less time. An applicant can usually simply drive to a store providing title loans and leave with the loan proceeds in 15 to 45 minutes. Title loans are quick to apply for and get. Because these loans are based on the vehicle’s value rather than your credit score, they are an appealing option if you have bad credit or no credit and need money quickly. Much like payday loans, car title loans are designed as a fast way to get cash for bills or emergencies. It’s usually capped at 25% to 50% of the vehicle's value. Depending on state regulations, the dollar amount of these loans usually ranges between $100 and $10,000. Loan terms vary by state, though, and can range from as few as 15 days to over a year. At the end of the term, a single balloon payment of interest and principal is due.
In states where they are allowed, these loans typically have a term of 30 days. Some states don’t allow these loans at all. What Is a Car Title Loan?Ī car title loan is a short-term secured loan that uses the title to a vehicle (either a car, truck, or motorcycle) as collateral. The following ideas may help you do that. If you currently have a title loan, the best thing to do is to get out of it quickly. They also increase your risk of having your car repossessed. Though these loans may seem like an ideal solution to an emergency need for cash, their high interest charges and extremely short loan terms make them difficult to manage. These loans are based on your car’s value, not a credit check, so you don’t have to go through a traditional loan approval process to get one. If You Can’t Adjust Your Terms or Refinance.Ĭar title loans are a quick and easy way to get cash in a hurry by using your vehicle’s title as collateral.If You Can’t Pay Off the Loan Right Now.Getting Out of an Auto Title Loan Without Losing Your Car.
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