What is the interest rate on a title loan? | finder.com
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What is the interest rate on a title loan?

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Plus other fees you might be on the hook for.

Title loans aren’t cheap. While they typically have a fast turnaround and relatively few requirements to qualify, interest rates often reach the triple digits. And you’ll want to keep an eye out for fees when weighing your options.
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    What rate can I expect on a car title loan?

    It’s typical for interest on a title loan to top 100%. But with title loans and other types of short-term loans, the rate you get typically depends more on your loan amount, your term and where you live, rather than solely on your personal credit rating. All three can influence your rate.

    State limits on title loan interest rates

    Some states and cities enforce caps on how much a lender can charge for a title loan, which might affect your interest rate.

    For example, California caps interest rates at 3% a month, which translates to 36% in interest annually. Arizona caps interest rates at 10% to 17% a month, depending on how much you borrow. That’s roughly to 121% to 206% in annual interest.

    Title loan APRs vs. interest rates

    The interest rate actually isn’t the most important number to consider when weighing the cost of a title loan. Instead, you’ll want to look at its APR — or annual percentage rate.

    The APR is how much you’d pay in interest and fees over one year, expressed as a percentage. Looking at the APR rather than the interest rate makes it easier to compare loan offers of similar amounts and terms.

    The typical APR on a title loan is around 300%, according to the Federal Trade Commission.

    Compare rates from top title loan providers

    Loan Mart60% to 222%
    MaxCashVaries by lender
    Finova FinancialUp to 30%
    Loan MaxVaries by stateRead review
    Title MaxVaries by stateRead review
    Presto60.83%Read review

    Compare more title loans

    Additional title loan costs to consider

    Title loan providers might charge other fees associated with taking out and repaying the loan, including:

    • Lien filing fees. Your lender might ask you to cover the cost of putting a lien on your vehicle’s title.
    • Late payment fees. If you’re late on a payment, you could face a fee equal to 5% of the payment due, though it varies by lender.
    • Nonsufficient funds fees. Many lenders charge a fee if your check or bank transfer bounces. These canceled check or returned payment fees are often the same amount as the late payment fee.
    • Collection fees. If you fail to repay your loan and your car is repossessed, your lender might charge a fee for the cost of collecting your vehicle. This fee is typically added to your loan balance and covered when it resells your car.

    Not all lenders advertise rates and fees online, especially if they aren’t legally required to do so. You might have to call ahead or visit a storefront in person to learn the costs you can expect.

    Compare title loan providers

    Rates last updated February 22nd, 2019
    Unfortunately, none of the short term loan providers currently offer loans in your state. Learn more about short term loans in your state to find an alternative.
    Name Product Product Description Max. Loan Amount Turnaround Time Requirements
    Max Cash Title Loans
    With a quick online application, Max Cash could help connect you with a lender, finding you options in minutes.
    As little as 1 business day
    Must be a US citizen or permanent resident, 18 or older with a regular source of income.
    AutoTitleLoans.com Car Title Loans
    Quickly find a lender and potentially borrow up to $10,000 by using this auto title loan connection service.
    Varies by lender
    Have a regular source of income, not be involved in any bankruptcy proceedings, be a US citizen or permanent residence, be at least 18 years old (varies by state).
    LoanMart Car Title Loans
    A LoanMart auto title loan allows you to borrow money against your car, even if you have bad credit.
    1 business day
    Must live in AL, AZ, IL, MO, NM, SC or UT. Must have verifiable income, car value of at least $1,500 and a vehicle that is paid-off or close to being paid-off.
    Finova Financial Auto Equity Loans
    Short-term loans secured by your car title. Repayments accepted through MoneyGram if you don't have a bank account.
    as little as one business day
    Must live in AZ, CA, FL, NM, SC or TN. Must own your car outright, have a valid car insurance policy and be a US citizen or permanent resident.
    TitleMax Auto Title Loans
    Auto title loans on cars and motorcycles to people in 16 states across the US.
    as little as 30 minutes
    Must have a lien-free vehicle title, government-issued ID, and be age of majority in your state.

    Compare up to 4 providers

    How rates work on single-payment vs. installment title loans

    Title loans fall into two main types: single-payment and installment.

    How they’re different

    You repay single-payment title loans all at once, usually within 30 days. They often come with a flat fee that’s expressed as an amount per $100 borrowed.

    Installment title loans are repaid over a specified term of three months to three years. They tend to come with both interest and fees and often have lower APRs than single-payment title loans.

    How the type affects the cost

    An installment title loan with a low APR could end up being more expensive than a single-payment title loan, because there’s more time for interest to add up.

    Let’s take a look at how a $1,000 single-payment title loan and installment title loan with a four-month term compare.

    Single-payment title loanInstallment title loan
    Interest and fees$583$694
    Total cost$1,583$1,694
    Cost per month$1,583$423

    As you can see, the installment title loan actually costs more overall. However, it’s more affordable in the short term, lowering the chance that you’ll have to roll over or refinance your loan.

    The cost of rolling over a title loan

    Rolling over a title loan — also called renewing or refinancing — involves taking out a new loan to give you extra time to pay it off. It’s common with single-payment title loans. Each time you renew, you pay the same rates and fees that came with the original loan. Some states ban or limit how many times you can roll over your loan, though not all do.

    Only 12.5% of borrowers are able to pay off their loan without rolling it over, according to a Consumer Financial Protection Bureau study. Nearly 50% of borrowers renew their loan 10 times or more.

    This increased cost makes it increasingly more difficult to pay off the debt, which could be why around 20% of title loans end in repossession.

    Is a title loan right for me?

    A title loan might be a high-cost financing option, but it can benefit specific situations, like:

    • When you need money fast. Title loans can get you funds in as little as 30 minutes. The only other type of loan with that kind of turnaround is a payday loan, which tends to come in smaller amounts and with higher APRs.
    • When you have poor credit. Title loan providers typically accept all credit types. Some might not even check your credit when you apply — though you might want to think twice about no-credit-check loans.
    • When you don’t have a bank account. Some title lenders are willing to work with borrowers that don’t have a bank account — though not all.
    • When you need a larger short-term loan. Title loans can sometimes run as high as $50,000, depending on the value of your vehicle and where you live.

    Bottom line

    Getting a title loan is expensive and comes with several risks — including losing your car and getting caught in a cycle of debt. Before you apply, consider how much you want to borrow and whether a single-payment or installment loan better fits your budget.

    To learn more about how these products work, read our comprehensive guide to title loans.

    Frequently asked questions

    Anna Serio

    Anna Serio is a staff writer untangling everything you need to know about personal loans, including student, car and business loans. She spent five years living in Beirut, where she was a news editor for The Daily Star and hung out with a lot of cats. She loves to eat, travel and save money.

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