Key Takeaways
- Most title loans don’t have low interest rates, but good qualifying factors may help lower it
- Your credit score doesn’t affect your approval but may affect your title loan interest rate
- You may be able to negotiate your title loan interest rates or shop around for better rates
- There are many alternatives to title loans you may want to consider to save money on interest
You may be disappointed if you’re in the market for a car title loan and are looking for low interest rates. Car title loans notoriously have higher interest rates because lenders take a significant risk when approving them. Title loans are mostly for people with below average credit scores who cannot get approved for other loan options.
The good news is that you can find competitive interest rates by shopping around and comparing your options between lenders. At Swift Title Loans, we work with our borrowers to ensure you get the auto title loan you can afford while satisfying your financial emergency.
What Affects Title Loan Interest Rates?
Like traditional personal loans, title loan lenders look at many factors when determining your title loan interest rate, including:
- Credit risk: Title loans don’t require a minimum credit score or even a good credit history, but the better your credit, the lower the interest rate a lender can charge.
- Amount borrowed: The larger the loan amount you borrow, the riskier it is for the lender. Most lenders compensate for this by charging higher interest rates.
- Loan term: The longer the repayment period you request, the more risk the lender takes. A shorter term repayment period may allow for a lower interest rate.
Can I Negotiate Title Loan Interest Rates?
While you can negotiate title loan interest rates, not every lender will do this. Every lender has different rules regarding what they will and will not do with car title loans, including whether they will negotiate title loan interest rates.
The best thing you can do is shop around for the best title loan rates from different car title lenders. Be sure when comparing rates that you read the loan agreement carefully. Understand the loan’s term and ensure the agreement states cap interest rates if you have a variable rate loan.
How Do I Qualify for Title Loans?
If you’re in the market for auto title loans, know that every car title lender has different requirements. In general, though, here’s how you qualify:
- Prove you have the income to cover the monthly payments and your current debt
- Have possession of the car title with your name on it and no liens
- Have possession of the vehicle and be able to prove its value via pictures
- Show proof of proper car registration and auto insurance for the vehicle
- Show proper identification issued by the government, such as a driver’s license
Can You Get Approved for a Title Loan With Bad Credit?
The best thing about car title loans is you can get them even with bad credit. Title lenders don’t focus on your credit score or credit history. Instead, they look at the big picture to determine if you can afford a title loan.
Lenders focus mainly on the vehicle’s value because this is the loan’s collateral. If you miss your payments on these short-term loans, lenders can repossess the car and sell it to make up the funds. They also consider your income to ensure you can afford repayment.
Does a Bad Credit Score Affect My Title Loan Interest Rate?
While there are many factors that affect your title loan interest rates when borrowing money, a bad credit score isn’t one of them. Some lenders may consider your credit score, which may have a small effect on your rate, but it’s not the main factor in this payday alternative loan.
Alternatives to Title Loans
If the high title loan rates aren’t something you want to consider, try these alternatives instead:
- Borrow money: If you have a financial issue requiring a small amount, consider asking friends or family if you can borrow the funds. You’ll avoid the high interest rates and still get the money today.
- Use a 0% APR credit card: If you already have a 0% APR credit card or think you can qualify for one, consider using it. You don’t pay any interest if you pay the balance off before the 0% annual percentage rate expires.
- Apply for a personal loan: If you have decent credit, you may qualify for a personal loan, especially with an online lender. Look for lenders with more lenient guidelines to get your loan proceeds at a lower interest rate.
- Find a cosigner: If you don’t qualify for a loan on your own, consider finding a cosigner. This is someone who will go on the loan with you and be responsible for the payments if you don’t make them. Their better credit may help you qualify.
FAQ
What Is The Highest Title Loan I Can Get?
The amount of title loan you can borrow depends on the value of your car. Most lenders allow you to borrow 20% to 70% of your car’s value, so the more your car is worth, the more you can borrow. With us, you may get up to $50,000, depending on your car’s value.
What Are The Disadvantages of a Title Loan?
Title loans have several disadvantages, including:
- High interest rates
- Risk of losing your car in a repo
- It can be hard to afford the monthly payments
Do Title Loans Hurt Your Credit?
Title lenders don’t report title loans to the credit bureaus. However, if you miss payments and they sell your loan to a collection agency, the collection agency will likely report them to the credit bureaus. Typically, a collection can cause your credit score to drop significantly.
Final Thoughts
Since low-interest title loans don’t necessarily exist, it’s important to know what to look for when you need one. At Swift Title Loans, we ensure our borrowers fully understand the interest rates, loan terms, and what’s at stake when applying for a title loan.
If you’re ready to see what you qualify for, apply online. You’ll receive an answer within minutes about whether you can use your vehicle as collateral for a title loan.
