Title Loan Interest Rates

Title loans Fort Worth have quite a few perks they hold over other types of loans. Getting one is a very fast, simple process that only requires you to have a car, and you never need to go through any sort of credit check to get one. One of the most common questions among borrowers is how much title loan interest rates are.

This handy guide will cover everything you need to know about title loan interest rates, ensuring that you have an accurate idea of how much a title loan will cost you.

The Basics on Title Loan Interest Rates

To understand how the interest rates on title loans work, it's important to understand how the title lending industry is regulated. The federal government can set regulations on the title lending industry throughout the country, and each state can set regulations on title loan companies operating within the state.

The federal government has only regulated the age you must be to get a title loan, which is 18 years old and up. Other than that, there are also certain characteristics of title loans that don't change no matter the state. They're always secured loans with the car being the collateral and the title loan company getting the title to the borrower's car to hold onto during that loan's repayment period.

States set their own regulations and limits for certain aspects of title loans, including interest rates. Therefore, the maximum interest rate that the lender can charge you will be determined by what state you're in.

Interest Rates on Texas Title Loans

If you're getting a title loan in Fort Worth, it's going to follow the Texas title loan regulations. For the most part, Texas doesn't put many restrictions on the title lending industry, but it does set the interest rate limit at 10 percent. However, it's important to keep in mind that there can be fees for title loans in Texas besides the interest.

As far as the other key title loan regulations in Texas, here is a quick rundown:

  • There is no limit on how much you can borrow with a title loan.
  • There is no minimum title loan term length, but the maximum is 180 days. Most lenders go with 30 days as their standard term length.
  • If you default on a title loan, there is no minimum waiting period before the lender is allowed by law to repossess and sell your vehicle.

How Interest Rates Work for Title Loans in Other States

There are essentially three types of states when it comes to title loan interest rates:

  • States that don't put a limit on the interest rate a title loan company can charge.
  • States that put one limit on the interest rate a title loan company can charge.
  • States that use a sliding scale of interest rate limits depending on the amount of the title loan.

Delaware is one example of the first type of state, as it doesn't put any limit on the interest rate title loan companies can charge.

Texas is an example of the second type of state, since it has that interest rate limit of 10-percent on title loans.

Arizona is an example of the third type of state. Its interest rate limits on title loans are as follows:

  • 17 percent per month when the loan amount is up to $500
  • 15 percent per month when the loan amount is over $500 up to $2,500
  • 13 percent per month when the loan amount is over $2,500 up to $5,000
  • 10 percent per month when the loan amount is over $5,000

Figuring Out Your Title Loan's Interest Rate

If you aren't in Texas, you can see how much you'd need to pay in interest on a title loan by looking up the title loan laws in your state. Another option is to go through the title loan application process, which goes as follows:

  1. Find a title loan company and fill out an application.
  2. Wait for the title loan company to inspect your car and determine its value, which is how they figure out the maximum they can lend you.
  3. Check the terms of your title loan agreement.

Title loan companies need to provide you with a full breakdown of any interest and fees on your title loan. If this isn't clear to you, all you need to do is ask.

It's easy to extend title loans if you need more time to pay. When you extend a title loan, the interest rate remains the same.

Getting Your Title Loan

It's always smart to know what the interest rate will be before you finish applying for a loan. This can help you determine if a title loan is the right choice for you. To minimize the amount of interest you pay, try to get your title loan paid off on the due date so that you don't need to extend it and pay extra for that convenience.