How Long Do I Have To Pay Back A Car Title Loan?

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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 might mean monthly payments are lower but you will often have to pay more interest.

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. 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 the loan and hence the longer payment period offered by the lending company.  Interest rates vary based upon the amount required and the duration of the loan. Pay attention to the total repayment value.

Which type of repayment schedule is best for you?

1-2 Years

  • When taking out a loan aim to make the monthly payments manageable within your monthly budget. Judge the duration of your loan by what is affordable on a monthly basis for the amount of money you need to borrow.
  • 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. The value of the loans and the length of time to repay depends on your circumstances and affordability, it is quite conceivable that smaller amounts need multiple years to pay off because of a lower income.
  • Keep in mind the longer you take to pay off your loan, the more interest you will generally pay, subject to the thresholds lenders set for the interest rates applied to various loan amounts. Shop around for a company with the best terms and rates. Use a directory of online title loan lenders to compare finance charges and monthly payment options for each loan offer.
  • Most borrowers do not mind the high interest that goes with longer payment periods because the repayments are more 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 loan is stretched out for three to four years, it is more manageable as it is smaller.

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 loan obligations?
  • What changes can I make in my lifestyle to keep aside enough funds to make the monthly payment?
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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.


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