Car title loans are ideal for people who need a good amount of money, are automobile owners, and are looking into paying off a short-term loan of as short as six months to a maximum of 36 months (up to 48 for some, if the need for it is apparent). The process is very straightforward and a lot less complicated compared to traditional loan, bank loans, and others.
But just like any other loan, car title loans also come with interest – and rightly so. While lenders generally tend to make the loan service as light as possible for the loan applicant, interests are necessary to ensure that the lending business stays afloat and available for those in need. Not all lenders are the same though, because some tend to really make a killing by slapping on very high interest loans that end up being overly burdensome to the unassuming loan applicant. This is why it is important to know all that you can about loan interest rates. The more you know, the more empowered you will feel about it – and the easier it will be for you to go ahead with the car title loan!
The great thing about taking out a loan through LoanMart is that they are a highly competitive and aggressive – meaning their primary focus is on ensuring that their clients (and would-be clients) have enough options to find one that suits them the most. Each loan is computed until it works out for the client and that the monthly amounts are not burdensome.
Of course, the borrowing rules for a car title loan will differ in the different states where LoanMart currently operates. At present, these service areas are in the states of Alabama, Arizona, California, Georgia, Missouri, New Mexico, South Carolina, and Utah. For as long as your car title is registered in any of those states and you have the ability to repay your loan, you can get approved for the loan amount and receive your money in as short a time as the following business day3.
As such, interest rates will differ depending on the state where you reside and the agreed terms between LoanMart and yourself. However, the range of annual interest rates remain the same, which is from as little as 60% to a maximum of 222%. To illustrate, if you apply for a loan of $2500 and the corresponding 90% annual percentage rate will be given for a loan term of 18 months, you can be expected to pay $257.57 monthly. From this figure, we can compute that the total scheduled interest on this particular loan at the set number of payment months (which is 18) is at $2136.26. Pay it off early and the interest cuts off at that point.
Apart from the state where you live, there are other factors that will have an effect on the computed interest rate of your loan. One is if you make your monthly payments on time, every time. If you fail to accomplish this, you can end up paying higher the following months.
Some people get taken aback upon seeing the total loan amount, but the truth is it’s a normal rate as far as most loans go – even a bit smaller compared to other types of loan. What should be understood here is that the total amount is divided across the payment period so its manageable for the person who applied for the loan in the first place. For people who need money with some urgency, this is something that they can live with after weighing the pros and cons of not being able to meet their unexpected financial obligation vis-à-vis paying a 90% annual percentage rate loan stretched out over the course of 18 months.
A car title loan certainly is much better than other loans like a payday loan, for example. Payday loans are also short-term loans like car title loans, although the maximum amount (something in the $300 range) is a lot smaller than what you can get with a car title loan. This short-term loan needs to be completely paid back in full within 31 days, which can be deducted from your next payday. In contrast, car title loans are more generous in terms of loan amounts (up to several thousand dollars) and the amount can be paid back over the course of a much longer period. The payday loan is like a Band-Aid fix, while a car title loan is more for people who require a longer time in fulfilling their financial needs.
The Best Approach When It Comes to Interest Rates
Now that you know the figures, you probably have a general idea of what kind of interest loan will apply to specific loan amounts over a given period of time. There are some things that you can do to ensure that you meet your financial obligations and avoid having the interest rate rise higher than you can afford:
- Pay off your monthly fee on the deadline – every single month. Make sure your payments are on time to avoid having the interest fees compound. If you are late with your payments several times over the course of the payment period, you run the risk of having an interest rate that is much higher than what was originally computed for you. Worse, you might find yourself needing to extend the payment period, which will also translate into extra months paying for the interest rate.
- Find ways to shorten your payment period if possible. People who are dead set on paying off their loan while avoiding any additional fees make it a point to pay on time and even find ways to pay extra. Doing so can shorten your payment period. For example, if you pay double the amount for a few months because you have extra money to spare, this act can shorten your payment period and effectively shorten the time that you have to pay for interest rates. While this may not be the usual scenario for all people who take out car title loans, it does happen and people find that it helps them to save money in the long run.
- Try going for a shorter payment period with a larger sum each month. Interest rates grow higher when you stretch out your payment period and make smaller payments each month. This is simply because it will take more time for the loan provider to collect the money you owe them, so they adjust the loan interest accordingly. If you feel that your situation will allow you to pay more in a shorter period of time, then by all means go for it! It will certainly be better for you in the end, money-wise. To make this decision, you will have to compute the maximum amount of money you can expect to generate for the next couple of months or year and use that as a base starting point for your loan monthly payments.
Getting a car title loan with the aforementioned interest rate range is not as bad as most people make it out to be, especially when you compare it with the other types of loans that a) are more complicated to apply for, b) have higher interest rates, c) have less forgiving payment periods, and d) have strict penalties that can really wipe you out, financially. All in all, car title loans with LoanMart and their corresponding interest rates are very manageable for a lot of people. Just make sure that you:
- Prepare for the monthly payments by diligently setting aside the necessary amount each month
- Find ways to generate money on the side as a way of paying extra so you can shorten your payment period
- Adjust your living expenses so you ensure that you have money left over at the end of the month for the following month’s dues
- Become very open with your loan officer when it comes to the amount that you can realistically pay for each month and the interest rates that you are most comfortable with. The great thing about transacting with LoanMart is that their loan officers have enough leeway to make adjustments to your specific case, despite having a set fee schedule as a general guideline for all. With this kind of adjustment, you can be sure that you have a loan agreement that is most fit to your needs and takes into consideration your capacity to pay and for how long you can do it.
Now that you know all these things about the interest rates attached to car title loans, you can now apply for one with confidence and the assurance that you know what you are getting yourself into and that you will be able to meet your monthly fees – and corresponding interest rates – accordingly.