Written by: Shir Amram
Looking to break free from the burden of your title loan quickly? You’re not alone. Many individuals find themselves grappling with high interest rates and seemingly endless payments. Fortunately, there are viable options available to expedite your journey out of this financial obligation.
In this comprehensive guide, we’ll explore effective methods and strategies specifically designed to help you pay off your title loan fast.
What Is a Title Loan?
A title loan is when you borrow money using your car as collateral. These loans are often chosen by people with no credit or bad credit because they don’t require a high credit score. They usually offer smaller amounts, starting from $100 and going up to $50,000.
The unique aspect of title loans is that you get to keep your car and continue driving it while you have the loan, which can be convenient.
However, they come with some big downsides. Title loans are very expensive, with interest rates around 300% per year. Plus, they’re risky because if you miss payments, you could lose your car.
Good to Know:
Many borrowers worry that they’ll be hit with penalties for paying off their title loan early, but that isn’t the case with every title loan company.
Most likely, paying off your loan as soon as possible will save you money, and may be the best financial decision for your situation. After all, the longer you hold onto a debt, the more you’ll pay in interest throughout the lifetime of the loan.
How to Pay Off Your Loan Faster
Below are some strategies that can assist you in paying off your title loan more quickly:
1. Round Up Your Monthly Payments:
Instead of paying exactly what’s due each month, round it up to the nearest increment, like $50 or $100. For example, if your payment is $277.31, round it up to $300. This little extra bit adds up over time, helping you pay off your loan faster and saving you money on interest.
2. Start a Side Hustle:
Earn extra cash by starting a side job in your free time. You can drive for rideshare services like Uber or Lyft, freelance on platforms like Upwork, or sell stuff you don’t need online. Use the money you make from your side gig to speed up paying off your title loan.
3. Consider Downgrading Your Vehicle:
If you’re okay with getting a cheaper car, check out your options carefully. While you can’t sell your car while you still owe on a title loan, some lenders might take over the loan if you trade in for a less expensive vehicle. Or you could find a buyer willing to pay off the loan directly.
4. Avoid Missing Payments:
Don’t skip payments if you can help it. Missing payments means you’ll pay more in interest, and it’ll take longer to pay off your loan. Set up automatic payments or use reminders so you never forget. Keeping up with payments helps reduce how much interest you owe overall.
5. Make Extra Payments:
Whenever you have some extra money, put it toward your title loan. Whether it’s a little extra each month or a big lump sum from a bonus or tax refund, using extra money to pay down your loan faster is a smart move. It helps lower the amount you owe and gets you closer to being loan-free.
6. Talk With Your Lender:
If you’re having money problems, talk to your lender. They might be able to help you out or come up with a plan that works better for you. You could discuss options like refinancing to get a lower interest rate or better repayment terms. Keeping them in the loop could lead to finding a solution that suits both of you better.
Pay Off Title Loan Early – The Bottom Line
Title loans are known for high-interest rates, so prepayment is a great idea.
To pay off your title loan faster, consider strategic approaches like rounding up monthly payments and seeking additional income. Communication with your lender is crucial for potential refinancing or assistance. By following these steps, borrowers can expedite their loan repayment and achieve financial freedom sooner.
However, stopping monthly payments is strongly discouraged. Doing so damages your credit, puts your car at risk of repossession by the lender, and leaves you with ongoing debt. It’s essential to explore alternative repayment methods to avoid these detrimental outcomes.
At Montana Capital Car Title Loans, we offer title loans without prepayment penalties or fees. If you need additional assistance, feel free to call us at 888-700-8900.
Written by
Shir Amram
Shir Amram is a senior loan officer at Montana Capital Car Title Loans. With over 10 years of experience in the finance industry, Shir has been an asset in her role and has contributed significantly to our company’s success, Shir’s academic background in economics and financial knowledge helps us fulfill our education mission as she creates a valuable content to our blog.