How Much Time Do I Have To Pay Back A Title Loan?

How Long Do I Have To Pay Back A Car Title Loan?
The typical term for a car title loan often depends on the amount you agree to pay each month. If you can pay more, the duration will be shorter. On the other hand, a longer payment term means you will have to pay more in finance charges. So with a short term loan, you will pay a lower interest rate as compared to longer term loan.

  • Short term period (1-2 years)

This is for individuals who can pay off their title loan faster and hence will benefit from a lower interest rate. Most vehicle equity loans fall into this period as an effective way to borrow money without being stuck with payments for years at a time. The downside is that you risk default with having too high of a monthly payment. Since this is a secured loan, you need to make sure you can comfortably adhere to the payment terms.

  • Maximum loan term (3-4 years)

This is for individuals who need more time to pay off an auto title loan and hence the longer payment period offered by the lending company. They do not mind the higher interest rate.

Which type of repayment schedule is best for you?

1-2 Years

  • The goal is to make the monthly payments lighter so it doesn’t affect your monthly budget. While some people may find the shorter payment period quite stressful because of the pressure to come up with a larger sum of money in a short period of time, there are many who choose this payment duration because of the lower interest rate. However, many online title loans last for a few months because most borrowers are able to pay off their debt fast.
  • If you have taken the loan for a business investment and foresee that your returns will be in smaller increments, the 1 to 2 year period may not be the best choice for you.

3-4 Years

  • If you had taken a large amount of money, paying it off in a short period of time could be unmanageable. Usually, when a customer has taken tens of thousands of dollars, this is the option they go for. There are also customers who have taken low loan amounts but can only afford to pay it off in smaller amounts. Keep in mind the longer you take to pay off your car title loan, the higher the interest rate will be. In a situation like this you need to save money and shop around for a company with the best terms and rates. Be sure to work with a company like HyperLend, that lets you compare their terms to other comparable lenders.
  • Most borrowers do not mind the high-interest rate that goes with longer payment periods because it is more convenient and manageable. For some, it is easier to settle the loan’s interest rate in a longer period of time rather than be pressured to come up with big sums of money every month to repay the loan.
  • Borrowers prefer as little disruption as possible in their monthly budget. When a title loan is stretched out for three to four years, it is more manageable as it is smaller. This also allows enough room to splurge on non-essential spending, like shopping, gym membership, weekend outings, etc.

Check with our title loan companies to see if they have better payoff terms.
When deciding how long you need to take to pay back the loan, ask yourself these questions:

  • How long can I continue to make monthly payments without upsetting my monthly budget?
  • Where do I see myself six months or three years from now? Will I be in a financially stable position to meet my obligations to payoff the money I borrowed with a car title loan?
  • What changes can I make in my lifestyle to keep aside enough funds to make the monthly payment?