Common Car Title Loan Terms

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What Do I Need to Know About Interest Rates?

Financial education is really important. Financial terms and rules are really confusing, and oftentimes things aren’t explained as good as they should be for the average consumer. As a result of the miscommunication, a lot of borrowers are in debt, and are committing themselves to loan terms that will not help their finances in the long run.

It is important to know what all of the terms used means, so that you can make well-informed financial decisions. Ask questions, and do your own research, because no one else is responsible for your financial choices, except for you. Having a basic understanding of interest rates will help you out with your future purchases and agreements.

What is Interest?

Interest is simply the cost you pay for borrowing money. This cost can either be a onetime fee, or a recurring fee, it just depends on the terms of your agreement. Typically you only pay interest when borrowing from a financial institution, or a lending company. However, if you borrow money from a friend or family member, they may just charge you interest as well.

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What Are the Different Types of Interest?


Simple interest is calculated based on the principal amount of the loan. It is paid only one time and cannot change.

  • Simple interest is calculated by the following equation:

Principal x interest rate x time= interest

Let’s say you take out a title loan for $1,500, with a rate of 25% (0.25) for 1 year, the total interest you would pay is $1,500 x 0.25 x 1= $375.


Compound interest is calculated based on the principal and any interest earned previously. Meaning that, you have to calculate the interest from each year, and then add it to the balance before adding it to the next payment.

  • Compound interest is calculated by the following equation:

            Principal x interest rate= interest earned, year 1

            (Principal + interest earned) x interest rate= interest earned, year 2

            (Principal + interest earned) x interest rate= interest earner, year 3

…and so on.

Let’s say you borrow $1,250 at a rate of 25% for a term of 2 years. At the end of the 1st year you will owe $1,250 x 0.25= $312.50 in interest. And you will owe ($1,250 + $312.50) x 0.25= $390.63 in interest. Bringing the total interest for 2 years is $703.13.

Be aware that not all compound interest loans compound annually, some compound on a month to month basis. Check with your lender to see how their interest compounds, and adjust your arithmetic accordingly.


A fixed interest rate stays the exact same throughout the course of the loan term. This rate is determined at the time of signing, and allows the borrower to know the exact amount that needs to be paid each month, because it will not change. Fixed interest rates are typically seen in large purchases/investments like home mortgages or in car notes.


Variable interest rates, you guessed it vary, payment to payment. This variation is dependent on the current index value of interest (current market conditions) at the time. These rates change month to month, and can sometimes change week to week, in either direction. If the variable interest rate gets really high, you can find yourself in a situation where you are having a difficult time with repayment.


Prime interest rates are short term interest rates, used by commercial banking institutions for their very best customers. Prime rates are usually for commercial businesses, but can also be applied to mortgage loans, small business loans, and even personal loans.


Discount interest rates only apply to commercial banking, other financial, institutions. It is the interest rate the reserve charges on loans given to these banking and other financial institutions, so that they can loan funds to borrowers.

What is an Amortized Loan?

An amortized loan means a borrower has a set schedule of payments over time. These payments include both the principle and interest amounts. The amount that makes up the principle part of the payment is the money that was originally borrowed. The interest is the fee that is charged when people borrow sums of money.

Amortized title loans on cars work well if someone wants to take on the loan over an extended period of time. All the payments that a borrower needs to make will also be in the same amount every time and work to slowly pay off the entire loan plus fees.

What is the Average Loan Rate?

When you have a financial emergency, the last thing you want to do is waste precious time and effort trying to find funding. Then you also must do research to compare a long list of loan rates. Finding the average loan rate should not be your priority in your time of need. While there are a few factors that are necessary to consider beforehand, you should prepare yourself to make the right decision when picking the right non-traditional lender.

Average Title Loan Rates

While the average amount varies for a car title loan, the rates are usually regulated by your state laws. Some states will limit the rates based on how much you borrow, and some will regulate the rates based on the terms, or length of your loan.

Many people look for non-traditional lending for many reasons. They consider them easier to obtain than a bank, because there is less paperwork involved, the approval rates are higher and there are more frequent approvals. When you consider these options, you will find the tradeoff is going to be how much you are paying for an interest rate.

The factors in deciding how much you will get paid in a car title loan include different elements such as the collateral used, the ability to repay, and the length of the term.

Understand the Factors that Affect Interest Rates

We are committed to educating consumers on borrowing options that provide relief when money gets tight. With our simple application process and friendly customer service, our customers can have a Car Title Loan in a relatively short period of time. The money from a Car Title Loan can be used in any way, with no restrictions from us, and borrowers maintain access to the car as they pay the loan back.

Many consumers borrow money without a basic understanding of interest rates and how they work. Most borrowed money comes with some type of interest, and the specifics may be listed in the fine print of the documents that must be signed to complete the loan.

Factors Influencing Interest Rates

While every situation is different and your rate may depend largely on the type of loan you are obtaining, there are a few personal and financial factors that can influence the interest rate.

  • Credit Score 
    The likelihood of you repaying the loan may change your interest rate. We take pride in working with those with poor credit history that may be denied a loan from a bank. Risks are determined by your previous history obtained from your credit score.
  • Loan Length 
    The term of the loan is usually directly related to the interest rate. You can calculate your total interest and payment amounts before you receive your loan with our online payment slider.

Common Terms of a Car Title Loan

We believe in helping our customers as much as possible. That’s why we try to work with people who have poor credit or who were refused a loan from a traditional institution, and why we strive to make communicating with us as easy and convenient as possible by providing options to give us a call by phone or to chat online.

Part of what we want to do in order to help our customers is being open and honest about what getting a car title loan online looks like at every step of the process. From checking to see if a person may qualify – which is free to do – to ensuring they understand their loan terms, we want to make sure things are easy, simple, and clear.

Many people want to know what kind of common terms are included in a car title loan online and what their responsibilities will look like when they apply for this type of loan. To help our customers better understand what to expect, we’ve outlined some common terms borrowers will be responsible for:

Payment period: This is the time over which someone has to pay back their loan. We do not charge any fees if a borrower chooses to repay the loan early, or make extra payments to pay the loan back faster. However, there may be penalties for making late payments or failing to repay the full balance of the loan.

Payment methods:  We want to make it easy for our clients, so we offer several ways for customers to make payments, including mailing checks to our payment center, paying by phone, and paying online.

Interest charges: Lenders charge a fee in order to let customers borrow money, known as interest. This is the charge that must be repaid with the principle (the original amount of money borrowed).

Use of funds: Some lenders loan money for a specific purpose, and there are terms in the loan agreement directing that the loan funds be used exclusively in furtherance of that purpose.

Remember, these are just a few of the common terms that may be included in a car title loan agreement and they vary from lender to lender. A borrower’s responsibilities will depend on the specific terms of their particular loan.

Our customer service representatives are available if anyone needs assistance understanding the terms of a car title loan online. We’re happy to help and will be glad to explain our terms in more detail.

Getting Competitive Rates with Title Loans

Car title loans are different from a lot of other kinds of personal loans because they are secured loans. This means that the money is borrowed against collateral. Car title loans use the equity in the borrower’s vehicle as collateral for the loan. This secured aspect of car title loans makes them easier to qualify for among subprime credit individuals because the collateral decreases the level of risk.

Since your credit is less important to the qualifying process with a title loan, you may obtain far more competitive interest rates with title loans serviced!

Is Car Title Loan Interest Tax Deductible?

While traditional loans may offer benefits such as tax-deductible interest, personal loans do not have that benefit. The interest on a car title loan is not generally tax deductible; however, you can pay off your loan FAST which can be a much better benefit. The faster you pay off your car title loan, the less you will pay in interest.

When you get a car title loan, we will work with you to come up with a payment plan using our convenient terms and competitive rates. This makes your payment plan benefit YOU, so you can pay off your car title loan balance and not accumulate a ton of interest fees.

Overall, paying off your title loan faster can play more to your advantage than receiving tax deductions on your interest rates, which are already competitive to begin with.

Ways to Pay off Your Car Title Loan Faster

If you want to avoid paying more money in interest, the most efficient method is to pay off your car title loan balance as quickly as possible. Here are a few tips on how you can pay off your title loan faster:

  • Make the most of your installments – If you are able, make larger payments on your car title loan than is required. This will make the total balance of your car title loan decrease, so you will pay less money in interest in the long run.
  • Get a second job – Use the money from a second job to pay off your title loan. Getting a second job on the weekends or an internet job that you can do at home will give you some financial wiggle room in your budget. That way you can afford to make larger payments without taking too much money away from your regular paycheck.
  • Sign up for automatic payments – Never miss a monthly installment on your car title loan when you sign up for automatic payments. Accidentally missing a payment makes your total balance remain higher for longer, making you pay more in interest fees. Signing up for automatic payments eliminates that potential problem!

Tips for Avoiding Debt by Interest Rates

There are different ways to make sure that the interest rate doesn’t hinder your ability to pay back your loan:

  • Budget your time and your money. Planning where your money goes in advance helps in being able to plan for future payments. Being able to see where your money is going can also help you build a better financial sate for the future.
  • Meeting your monthly payment amounts and overpaying can help you in the long run. Making more than the minimum payments allows you to clear your car title sooner
  • There’s a convenient way for you to make payments, wherever you are. You can make payments:
  • Try living a little beneath your means. Spending less on your daily expenses means you can use more to pay off your loan faster. The faster you settle your car title loan, the sooner you can get back on track. Getting used to a frugal lifestyle can also prepare you for future savings and being in a better financial state.

What Benefits Do Title Loans Come with?

Title loans are a secure loan option that come with incredible benefits that are hard to find with any other loan option. But aside from offering some of the lowest title loan rates, what other benefits could an eligible borrower expect to receive?

Besides some of the lowest title loan rates, take a look at some of other benefits you could potentially receive with a title loan:

Low Monthly Payments

With a title loan, you may look forward to low monthly payments! There’s no need for borrowers to worry about struggling to meet their title loan payments!

Long Repayment Terms

If you are worried about struggling to pay back your loan within a short span of time, know that title loans could offer you more time for repayment if that is what you need!

Fast Inquiry Process

Title loans are convenient for individuals that need quick emergency cash because the inquiry process is usually fast. Inquiring for a title loan may take only a few minutes and depending on how quickly a person can submit their documents, it’s entirely possible for a qualified borrower to receive approval the same day.3

Flexible Qualification Requirements

Title loans were designed to help individuals who need emergency cash–period. Despite having low or unestablished credit, a person could still qualify for title loan funding!1 This type of flexibility is hard to come by with other loan options.

What Documents Do I Need to Get a Title Loan?

If you are interested in inquiring for a title loan with some of the lowest title loan rates, you can start by gathering all of the necessary paperwork beforehand. By having your documents ready, you can speed up an already quick process and potentially receive your title loan money sooner!

Take a look at the documents you will generally be asked to provide for a title loan:

  • Photo Identification: To complete any type of loan process, including a title loan with the lowest title loan rates, you must provide photo identification. You may choose to provide any government-issued photo ID, such as a state ID, driver’s license, or passport.
  • Car Title: One of the main qualifying factors for a title loan includes the car title. While many cars are accepted for title loans, the car title itself must be in your name.
  • Photos of the Car: When inquiring for a title loan with the lowest title loan rates online, you can skip the in-person vehicle inspection! Instead, you can just take photos of your car from each angle using your smartphone.
  • Proof of Income: Aside from the car title, your ability to repay a title loan is just as important for qualification. To show proof of income, you can use paycheck stubs, bank statements, invoices, benefit statements, etc.
  • Proof of Residence: To be deemed eligible for a title loan with some of the lowest title loan rates in your state, you need to show proof of your residence. This can be done by providing a title loan agent with credit card statements, utility bills (water, electric, etc.), phone bills, or insurance statements.
  • References: A title loan agent may ask for professional or personal references.

The Online Process to Get an Auto Title Loan

First Step

If you are interested in starting the title loan inquiry process, you can choose to:

The form will ask you just a few basic questions about your identity, the current state of your finances, and the details of your car. By using the online title loan calculator, you could potentially receive a free estimate before you even speak with a title loan agent if your car qualifies for funding! This should only take you a few moments and you may apply from any computer, tablet, or smart phone1.

Second Step

A loan representative will review all your provided information in the initial form and reach out to you to discuss the next steps in the process. They will then request that you send some basic documentation that may help verify all the information and fill in any missing pieces. But you don’t even need to leave your home! All you need to do is scan the documents or take pictures of them and then email over the files.

Third Step

Now all that is left is to review all your paperwork and notify you whether you are approved for a car title loan or not. Once you are approved for a title loan, you may get your money as fast as the very next business day1. You may pick up your approved money when it’s ready at any local MoneyGram location that is most convenient for you!

So, what are you waiting for? Apply for an auto title loan with great interest rates today1!

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