Whether you need cash to buy something or settle an emergency, the interest rate often forms the first thing that comes to mind when deciding on the amount to borrow. Borrowing a car title loan is no different.
Apart from determining the maximum credit your car title can fetch, you also need to know the interest for the loan on a monthly basis. This figure can be obtained by using an online title loan calculator or by consulting the financier.
In either case, here are some insights on how much you should expect to pay on a car title loan.
Industry Average
Ideally, most car title loan providers advance you cash services based on the current market value of your car. And while most financiers expected you to settle the advance within a month, some demand that you repay the loan in 15 days.
Most of these loans attract an interest of 25 percent of the value of the loan per month on a compounded monthly basis. Some financiers have however been reported to charge as much 50 percent of the loan advance especially in the case of bad credit score on the part of the borrower.
Why Consider a Car Title Loan?
Most people shy away from the car title loans terming their interest rates exploitative. These have also created a cloud of negativity with regards to these loans in comparison to the traditional loans and advances from established financial institutions like banks. They, however, fail to recognize that the car title loan is only recommended to solve emergency issues.
The car title loan opponents also fail to appreciate the convenience with which the loan financier avail the cash. They often eliminate all bureaucracy associated with clearance and strive to provide the cash immediately or within a few hours.
In such a case, what would have taken days to clear with such a financial institution as a bank only takes a few minutes or hours.
Additionally, most of these car title financers don’t deny loan claims based on poor credit score. Recent competition in the industry has particularly seen most of the financiers delist good credit score as one of the qualifications for the quick fix loan.
Is the Loan Worth It?
The interest charged on for the car title is evidently higher than that charged by the conventional banking institutions. You might, therefore, wonder if the loan is worth its cost? In such a case, the loan is worth it if you anticipate enough cash in the short run to cover its cost and other bills.
It is also worth it if you have limited options such as instances where the bank won’t avail credit services to you. You can also consider the cost implication of the loan worth if it helps you survive a cash crunch.
Remaining on the Safe Side
After checking on the title loan calculator and deciding to get the loan, you now need to put in place repayment strategies. Chief among these strategies should be the use of the loan in settling the urgent issues.
Additionally, make a point of repaying back the loan as soon as you lay hands on cash thus effectively ensuring it doesn’t hurt your financial life. Remember that failure to settle the cash advance on time not only compounds the cost of the loan but also gives the financier the right to impound or dispose of your car to repay themselves.