What is the Interest rate of Car Title Loan?
Listen to this articleA car title loan isn’t a cheap option, but its fast turnaround time makes it a delightful retreat for every person who can’t wait to cash. If you want to know how much you can get from this loan, then go to the lender website and add values like a car makes, model and year in car title loan calculator. Click on the calculate button, and within a few seconds, you can get an estimate of the loan amount. Although you have a view, yet you don’t need to rely on it entirely. It’s always suggested to know everything about every loan you apply for, and the same is right about car title loans. It’s time to see the interest rate of this loan, so you know the exact cost related to this short term loan before you sign any deal.
What rate will You Get on a Title Loan?
When it comes to setting an interest rate of a title loan, your loan provider will have little or no concern with your credit rating. It means that he won’t charge high when your credit score is low. Three factors that will contribute to your interest rate calculation are the amount of loan you get, your term, and the place where you live. These three factors will influence the car title loan’s interest rate. There is a limit set in some states that will affect the way your lender charges you for the title loan. If you look into the interest rate of California, then it’s 3 percent a month, in case of short-term loans, and it becomes a 36 percent interest rate annually.
Car Title Loan Cost Depends on ARP
Most borrowers think that they can check their loan costs through a car title loan calculator and get an exact estimate. It might seem a straightforward option. However, you can’t overlook a major factor. Your interest rate is less critical, the more critical aspect in a car title loan is Annual Percentage Rate or ARP. This number is contributing to your overall loan cost. Therefore you should show more interest in ARP than into an interest rate. ARP means how much cash a borrower pays in terms of loan interest rates and fees. According to the Federal Trade Commission, the typical ARP of a Title loan is almost 300 percent.
Additional Cost Related to Car Title Loan
It’s good to know about other possible charges or fees that you may or may not have to pay with a car title loan.
Lien Filing Fees- Some lenders ask you to cover transferring car titles to the lender’s name. However, it would be best if you went with a lender who absorbs such cost, and you don’t have to incur it.
Late Payment Fees – In many states, you need to pay 5 percent extra if you are new in the loan payment. But this rate varies from one lender to another, so you better get information about it.
Nonsufficient fund fees- Sometimes, you give a check as your payment and your bank account doesn’t have sufficient funds, and it’s when your check bounces. If that happens, then your lender will charge some fees in this situation.
Collection Fee- In case of default or non-payment of the loan, your lender will charge you with the collection fee to collect your car during the repossession process.
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