If you’re in a financial bind, it can often feel like there’s nowhere to turn. As the bills pile up and the responsibilities of life keep coming by, you may think there’s nothing you can do. And though we hope you never have to experience this, if there is serious financial hardship in your life right now, a car title loan might provide short-term relief.
Loan Cheetah works with lenders across the country to get you approved for title loans fast and easy, but before you click the “Apply” button, it’ll do you good to keep reading and see exactly what you’re walking into. Below, we’ll show you the most common interest rates you can expect on a title loan, as well as how you can avoid financial damage when it comes time to pay it off.
Title Loan Interest Rates Explained
Title loans are a unique type of secured loan that lends you money that is borrowed against the value of the title of your car. Because the loan is based on your vehicle’s equity, lenders usually limit the amount you can borrow to a percentage of its appraised value, and that generally includes a tight turnaround window – in most cases, approved title loans will be active for 15 to 30 days before you have to pay it all back.
With such short-term loans available to you, the money is made on the lender’s end by the interest rates that are added to the loan agreement. These interest rates are pretty high in most cases, and as a result, title loan laws vary widely by state — some cap interest rates or ban the loans altogether, while others permit them under specific regulations. Either way, it’s best to check first and see if your state can accommodate you if you’re looking at this as an option.
Check Your State’s Laws On Title Loan Approval
Most Common Interest Rate Ranges For Title Loans
Title loan amounts are usually within 25-50% of your title’s total value, so if you had a $5000 value on your car, you could qualify for a loan of up to $2500. That’s easy enough, and it’s usually a pretty simple process to get approved. But the interest rates are a bit more complicated than that.
Depending on the lender, the average Annual Percentage Rate (APR) of a title loan ranges from 125-300%. That’s because with the short turnaround time, the loan matures pretty much immediately, so rates have to get jacked up in order for the lender to turn a profit – otherwise, it’s not a sustainable business model. Loans above 300% APR are often considered predatory by consumer advocates and watchdog agencies, so you won’t see many lenders going beyond this figure. If they do, think twice.
What Does Your Total Payment Look Like On A Title Loan?
In our 300% APR example, this translates to a monthly fee of 25%. So, say you got approved for a 30-day title loan of $5000. At the end of the 30 days, when the loan comes due, you’ll be on the hook for $6250. That’s the original principal amount plus the title fee, and it should be paid off when the loan reaches its maturity date.
You may also need to be aware of lien fees, origination fees, and other expenses that won’t be disclosed in these initial figures, so make sure you ask about them if this is the route you want to take.
Read More: How Much Can You Get With A Car Title Loan?
How To Avoid Making High Payments On Your Title Loans
The real danger of high-APR loans is that if you miss a payment for any reason, the loan still continues in a past-due rollover status, incurring higher fees. If you go too long without paying, there could be some repercussions as well on your title – it can be repossessed, because borrowing against it means that you are basically betting your vehicle on your ability to pay off a loan in the short term.
To avoid this scenario happening, ask your lender about early payoff options and be sure that you’ll have the ability to pay what you owe at the end of the term at the very least – if you pay the loan off before it comes due, you may not be responsible for the full loan amount. Check the terms of the deal with your lender first, though.
Apply For Car Title Loan Approval At Loan Cheetah
We are happy to help you through your financial situation if you need cash in a pinch, so now that you know the risks involved in title loan borrowing, you’re free to apply for one today at Loan Cheetah. We work with certified lenders in your city and state to get you the best possible rates and terms, and since many of them will be located nearby, you can pay the loans off at their physical locations or online.
Apply today for a car title loan at Loan Cheetah and let’s help you get back on your feet.