No one likes debt hanging over their heads. If you currently have a title loan and are able to pay it off early, you could save yourself money on interest, plus boost your credit score!
Make sure you only pay your title loan back early if you have the budget to avoid additional financial difficulty. Also research whether or not your title lender charges a prepayment penalty, With Montana Capital Car Title Loans, you don’t have to worry about prepayment penalties or additional fees.
In a Nutshell: Paying Off Your Title Loan Early With Montana Capital
At Montana Capital Car Title Loans, we encourage borrowers to make decisions that are right for them. If you are in a position to pay off your car title loan early, we support you and do not charge any prepayment fees or penalties! Avoid additional interest charges by paying off your title loan early using one of the following ways:
- Online payment
- Over the phone
- Check/money order
Paying Off Your Title Loan Early Can Save You a Lot of Money!
Let’s look at an example of a title loan prepayment with Montana Capital and how much the borrower could save in interest.
A vehicle with a 36-month term that was paid on schedule would cost the borrower $17,890. If the same vehicle with the same loan terms was paid off after 6-months, it would only cost the borrower $4,310.
Example: Paying This 36-Month Title Loan in 6 Months Saves $13,580
| Examples | 36 months loans paid in 6 months* | 36 months loans paid in 36 months* |
|---|---|---|
| Loan Term | 36 Months | 36 Months |
| Your Loan Amount | $11,000 | $11,000 |
| Your Monthly Payment | $800 | $800 |
| APR | 78.31% | 78.31% |
| Payoff balance after X months | 6 Months | 36 Months |
| Your Cost of Taking This Loan (Interest) | $4,310 | $17,890 |
What Is a Title Loan?
An auto title loan is a loan against your car’s value. You borrow the money and give up your title as collateral, while keeping and driving your car during your loan’s term. Your title should be lien-free, and you must have proof that you can afford to repay the loan to be approved.
How Does a Title Loan Work With Montana Capital?
At Montana Capital, you may be approved for up to 70% of your car’s value if you qualify, with loan amounts ranging from $500 to $50,000. This is much higher than many car title loan lenders, offering only 25% to 50%.
Find out now how much you may be approved for by applying online. It’s safe, fast, and free!
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
If, after calculating your budget, you don’t feel you have enough room to pay your auto title loan off early, here are a few tips to help you pay off your loan faster.
Round Up Your Title Loan Payments
Rounding up your payments to the nearest $50, $100, or any other increment lowers your total amount owed. For example, if you’re only paying an extra $10 a month, it won’t make a huge difference, but every dollar counts, so don’t give up.
Cut Expenses
Review your budget and look for expenses you can cut. For example, if you pay for subscriptions or memberships you no longer need, cancel them. Likewise, if you haven’t shopped for a cheaper car or house insurance lately, see if you can save money by picking a new policy.
You can also cut back on certain habits, such as coffee shop stops and excessive shopping, or start using coupons for everyday shopping. Any money you save can be put toward your car title loan in your efforts to pay it off early.
Start a Side Hustle
Starting a side hustle can help you bring in more income. However, if you devote the funds specifically to pay off a title loan faster, you’ll reach your goal faster.
Downgrade Your Vehicle
If you are ready to downgrade your vehicle, you have options, but know that you can’t sell your car while you have a title loan.
You’ll need the title to sell the car, but some lenders may absorb the loan, paying it off with the proceeds of the new loan. If you sell the loan privately, you may find a buyer that will pay first and receive the title after you’ve paid off the loan.
Don’t Miss Payments
If you miss payments, it makes the interest accrue even more because you pay interest on the outstanding balance. Missing monthly payments keep your balance at a standstill and costs you more in interest charges, making it harder to pay the loan early.
Make Extra Payments
Some months you may have more funds than others. When you have extra money, consider making additional payments. You can do this periodically or make it a part of your budget.
For example, if you have free money each week, consider putting it toward your car title loan to pay it off early. You can also make lump sum payments when you have extra money.
Talk With Your Lender
Paying off your loan is mutually beneficial for the borrower and lender. If you’re experiencing a financial hardship, have an honest conversation with your lender. They are used to the unexpected and may be able to work out a plan for your unique situation.
Pros and Cons of Paying off Your Loan Early
There are pros and cons when you pay off a title loan early. Here’s what you should consider.
Pros
- You may pay much less interest on the loan overall
- You can eliminate the stress of having a title loan
- You can eliminate fear of being unable to sell your car
- You will have more money for other financial goals
Cons
- Check for potential prepayment penalties and extra fees
- If you pay more than you can afford, you might get behind on other debts
- You might need another loan if you come up short on other obligations
How Do Auto Title Loans Work – Applying With Montana Capital
It’s easy to apply for a car title loan with Montana Capital using these steps:
Apply online or call 1-800-700-8900
The application requires basic information about yourself, your income, and your car, including the VIN #, make/model, year, and vehicle mileage.
Upload necessary documentation
You must provide proof you own the car without any liens, have a stable income to cover repayment, government-issued ID, and pictures of your car’s interior and exterior in place of an inspection.
Receive your funds
Once approved, you may receive your funds as soon as the next business day, depending on how you choose to receive them. Montana Capital offers the option to pick up your check at your local branch, visit a MoneyGram location, or deposit the funds into your account via direct deposit.
We’ll determine how much you can get for a car title loan based on the information and qualifying documents you provide.
FAQs
Does Your Car Have to Be Paid Off to Use as Collateral?
It’s best if your car is paid off when applying for a title loan. However, if you have a small balance left, your title loan proceeds may pay it off, and you can receive the difference. If you still owe on your vehicle, speak with a Montana Capital representative to see how we can help!
Do Title Loans Affect Your Credit Score?
Title loans don’t typically affect your credit report if you make the payments on time. However, if you miss payments and it goes to a collection agency or repossession, it could affect your credit scores.
Does Paying Off a Personal Loan Early Affect Your Credit Score?
Yes, paying off a personal loan early can negatively impact your credit score. This is because:
- On time payments for the full term of a loan outweighs your positive payments when an account is closed early.
- Your loan no longer affects your history length. It still exists but will no longer grow older like other accounts that are open.
- Your account doesn’t create new data points.
Do You Save Money in Interest if You Pay Off Your Title Loan Early?
The sooner you pay off your loan, the more interest you will save. For example, if you have a loan with a high interest rate, even paying your debt off a few months early can make a drastic difference.
Is There a Downside to Paying Off Your Title Loan Early?
There are some downsides to consider when paying a loan off early.
- Some lenders charge borrowers a prepayment penalty or fee.
- Borrowers may experience a temporary drop in credit score.
Pay Off Title Loan Early – The Bottom Line
Title loans are known for high-interest rates, so prepayment is a great idea if you have the funds. So, the earlier you pay off a title loan, the more money you’ll save! At Montana Capital, we offer borrowers title loans without prepayment penalties or fees.
If you’re experiencing financial difficulty, Montana Capital Car Title Loans makes getting the funds you need easy. Complete an online application and see if you qualify for the funds you need. Apply online here and see how easy it is!
Written by
Samantha Hawrylack
Samantha Hawrylack writes for our company and is an expert in personal finance. Sam received her Bachelors of Science in Finance and her Masters in Business Administration from West Chester University of Pennsylvania. She began her career in the financial services industry and shifted to an entrepreneurial role where she could directly impact clients. Sam has an impressive background in personal finance and business management.