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Car Title Loan Uses and Penalties

There are many reasons as to why one would seek out an auto title loan.  If one is seeking out an auto title loan, he or she can use that money as freely as he or she would like.  Some people wonder why people seek out title loans, and the answer is simple; they are simple to use, and they are unrestrictive.

Most of the time when one is searching for a loan, he or she has to go from institution to institution in order to receive the best deal possible.  This process can be very long, discouraging, and time consuming.  Also, there are many barriers to one getting any loan, and the most common barrier is called a credit check.

Credit is not a Barrier
Though credit checks can be beneficial for lender, they can be a barrier for borrowers. They can leave a mark on one’s record that can be used against him or her for the rest of his or her life.  Auto title loans may make it easier for one to receive funding.  Credit has little to no effect on your eligibility and approval for an auto title loan.  This means virtually nothing is standing in between you and the funds you need. Auto title loans may help borrowers achieve their goal.

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How to Use an Auto Title Loan?

An auto title loan can be used for many different agendas.  One good way to use your auto title loan would be to use the money toward the purchase of your first home.  Federal Housing Administration loans allow you to receive income from other sources for the down payment on your first home.

Bills and Obligations

Most people can relate to a time when they could not afford to fulfil their financial obligations, and these obligations can come in many forms: child-support, utility bills, credit card bills, mortgages, rent, and/or alimony.  These obligations can add up quickly, and you may need funds to keep you current to protect yourself, your credit score, and your finances.


Consolidation is when one uses funds to cover multiple debts in exchange for one payment.  Sometimes this can save you tons of money over time.  Instead of you having multiple debts with multiple principle, interest payments and installment plans, you have just one.

This is important because debt can be compounded, and it can add up very quickly. Missing a couple of payments on different items can be the difference between financial freedom and an entrapment of debt.  Consolidation has helped many overcome their financial woes.

Possible Consequences to Auto Title Loans

There are many benefits to auto title loans, but there may also be consequences; however, these consequences generally only apply if one does not pay their title loan.  Title loans are a secured loan.  This means that one must have an asset (in this case, a vehicle with a title in their name) that can and will be used to cover a loan in case one defaults on his or her payments.


Repossession is one of the most common consequences that can occur if one takes out a title loan and fails to make their payments on time.  When one receives an auto title loan, the borrower is agreeing to allow the lender to place a lien on his or her vehicle.

A lien is a legal debt that can be enforced through the court system.  It protects lenders, and it allows them to repossess and liquidate assets to cover debts owed.  Liens can be placed on any form of property. Liens are common when one is receiving an auto title loan.

Pre-Payment Penalties

There are absolutely NO pre-payment penalties for those customers who would like to repay their car title loan before the contract final payoff date.

When you took out the loan you had a set date for the final payment of the loan. The reason for this is that O UR loans do have an ending point. If we set the loan duration to 2 years for example and you made each monthly payment on or before the due date over the two years, then you would be done!

Some customers want to pay the loan off earlier and that is GREAT because interest still is being charged while you have the loan out but once you stop, the interest stops as well. This is extremely helpful because you could literally save thousands of dollars.

Of course, there would NOT be a penalty for doing this.


Let’s say this month you decide to pay MORE than your current monthly payment. This is not paying off the loan, just paying it off faster.

When you overpay your loan, you have a couple choices. One is to let the amount of money just get applied to your loan balance.

Your BEST option is to let the extra money go to the principal balance. Why this is so smart is by doing an over-payment you are lowering the interest should you elect to pre-pay the entire loan off in the future!

Either way, pre-payment or overpayment, doing one or both is to your advance. This is a simple interest loan. Finance charges will accrue on the UNPAID Principal balance on a daily basis.

YOU are in control of the loan by using these options and if you do, you will surely want another in the future if money ever gets tight. We are here for you!

Making the Right Loan Decision

Just like most things, it comes down to responsibility.  Each action can have positive and negative consequences.  You have to do what you feel is best for you.  You may not want to take out a loan that you are not stable enough to repay. However, an auto title loan can be just what you need to uplift you, your family, and your business.

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