Title loans are often where consumers turn when they need quick cash. Even if time is of the essence for you, it’s still a good idea to shop around so that you avoid overpaying for title loans. The terms of a title loan can vary quite a bit from lender to lender. Fortunately, even if […]
Title loans are often where consumers turn when they need quick cash. Even if time is of the essence for you, it’s still a good idea to shop around so that you avoid overpaying for title loans. The terms of a title loan can vary quite a bit from lender to lender. Fortunately, even if you currently have a title loan with a high interest rate, you may be able to lower how much interest you pay by looking into title loan buyout programs.
Learn more about title loans, including typical terms, how you can get the best deal and how you may be able to refinance, in this handy guide.
Avoid Overpaying for Title Loans by Shopping Around
When you get a title loan, you need to pay it back or extend it by the due date. The amount you owe will be a combination of the following items:
- Your loan principal
- Your loan’s interest rate
- Your loan’s fees
But here’s the thing – the only item that’s set in stone is your loan principal, which is the amount you borrow. You will obviously need to pay that back. The other two depend on your state and your lender. In some cases, a title loan won’t have interest, won’t have fees or even both.
Each state sets its own maximum amount on title loan interest rates, although there are some states that haven’t put any sort of limit on this. For example, if you borrow $100 and your title loan has a monthly interest rate of 10 percent, then you’ll need to pay $110 to pay it back.
Fees are less common when it comes to title loans, but some lenders will charge them. This is especially true in Texas, where your typical title loan will include at least some fees.
There is a way that you can pay only the loan principal on your title loan, and that’s if you get a zero percent title loan. This means that you have an introductory period with no interest or fees, and you can avoid any extra charges if you pay the loan back by the end of this introductory period. Finding a lender that offers this is the best way to avoid overpaying for title loans.
Finding a Lender to Buyout Your Title Loan
What if you’ve already gotten a title loan, but the interest rate is higher than you like and it’s leaving you stuck with title loan debt? If you keep extending it, you’re just going to pay more fees and interest to the lender without making a mark on the principal.
You may be able to save yourself a substantial amount of money by finding a title loan company that will buy out your loan. Here’s how a title loan buyout works:
- You apply with the new lender for a title loan, following the same application process as any other title loan.
- That lender will pay off your title loan with the original lender.
- You can then pay your new lender at a lower interest rate, lowering the amount you’ll need to pay.
For example, if you had a title loan that was currently costing you 25 percent every month in interest, and you found a lender offering to refinance it at 15 percent per month, then refinancing would be an excellent idea. Of course, you need to find a lender that can buy out the title loan for you, but we can help you with that through our quick online title loan application process.
Should You Refinance Your Title Loan?
Even though refinancing your title loan can be smart, it’s not always the right move. It will depend on your situation.
If you can get a much lower interest rate through refinancing, then you should do that. However, if you’re already close to paying back your title loan, it doesn’t make much sense to refinance. You’ll spend valuable time going through the application process for the loan with the new lender, and it’s not worth doing that if you could just pay back your original loan in the near future.
Look for the Best Deal from the Beginning
A title loan buyout can help if you’re having trouble paying back your title loan, but if you haven’t gotten the title loan yet, remember that it’s wise to spend a little more time finding the best deal from the beginning. If there’s a zero percent title loan option available, you could end up paying much less that way.
It’s said that an ounce of prevention is worth a pound of cure, and that holds true in terms of refinancing your title loan. If you need to do it, go for it. But the only way to ensure that you don’t overpay is to find the lowest interest rate when you first apply for your title loan. We can do that for you when you fill out our online application.