How is interest on a title loan calculated?

To calculate the interest we simply multiply the Principal Amount times the Monthly Rate. We have the principal amount (the $1,000.00) and we have the monthly rate (15%). So the interest accrued during the loan term is: $1000.00 x 15% = $150.

What are two dangers of using a title loan?

The danger with car title loans is that they’re very expensive and have such a short repayment window. If you can’t repay the loan, rolling it over means racking up more fees and interest. That makes it even harder to repay the loan, a vicious cycle that could end up with you losing your car.

What is true of a title loan?

These loans use your paid-off car as collateral, and you get a small, short-term loan with a high interest rate. You usually have to repay the loan in 15 or 30 days, and the annual percentage rate (APR) is often more than 100%. Before you decide to take out a car title loan, weigh some options.

Does a title loan affect your credit?

Does a Title Loan Affect My Credit Scores? In most cases, a title loan won’t have any impact on your credit scores. That can be good and bad. For starters, most title lenders don’t run a credit check when you apply.

How much interest do you pay on a title loan?

So that $1,000 title loan you took out to have your fuel pump’s power train air gasket de-gunked may cost you $250 in interest at the end of one month, but at the end of twelve months, it’s going to end up costing you $3,000. Remember, that’s just the interest. You’ll still owe the principal amount of $1,000.

What’s the best title loan interest rate in Alabama?

TitleMax Title Loans – With over 90 stores throughout the state, TitleMax Title Loans is the most popular title lender in Alabama. The most common interest rate is about 300 percent per year depending on the length of the loan.

What should I look for in a title loan?

The interest rate actually isn’t the most important number to consider when weighing the cost of a title loan. Instead, you’ll want to look at its APR — or annual percentage rate. The APR is how much you’d pay in interest and fees over one year, expressed as a percentage.

Which is more expensive installment title loan or single payment title loan?

They tend to come with both interest and fees and often have lower APRs than single-payment title loans. An installment title loan with a low APR could end up being more expensive than a single-payment title loan, because there’s more time for interest to add up.

What’s the best way to pay off a title loan?

A fixed-rate loan from a bank, credit union, or online lender is often less expensive than rolling your title loan over month after month. Even a convenience check from a credit card can reduce your costs—as long as you are certain you’ll pay it off before any promotions end. Paying off the title loan also allows you to get your title back. 3