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What is the interest rate on a car title loan?
I need to take out a small loan to cover some home repair costs, but I have bad credit, and the loan offer from the bank has a higher interest rate than I expected. A friend of mine said a car title loan might be a better option because they don’t look at your credit, but what is the interest rate on a title loan?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Getting a loan through a bank with a poor credit score can be extremely challenging and frustrating. Unfortunately, car title loans can have interest rates of up to 25% or more a month, typically higher than banks offer. Add to that, repaying the loan does not help build your credit.
While you can use the interest rate to compare loan offers, they can be misleading. Loan providers will often cite their low-interest rates and exclude the fact that they have incredibly high lender fees that can take you by surprise. To more accurately compare loan offers, look at the
annual percentage rate
(APR), which includes lender fees and is a better representation of how much you’d have to pay back after one year.Car title loans can easily have an APR of 300%, put you at risk of having your vehicle repossessed, and do not help build your credit score, so taking out a personal loan from your bank may be a better option. To ensure you are getting the best deal, you should compare offers from multiple lenders before signing an agreement.
If you’re looking for ways to save and make the home repair costs more manageable, consider downloading the
Jerry
app to save on your car insurance
. In less than 45 seconds, Jerry collects all of your information from your existing insurer. Choose from competitive quotes from up to 50 top insurance companies, and Jerry takes care of the rest—securing your new policy and helping you cancel your old one. No long forms. No calling around. No hard work. Just savings. The average Jerry user saves $879 a year on car insurance.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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