Title loans can be an important option when you need cash fast. However, if you’re like most people, you probably don’t like to be in debt for long. Don’t worry. Even if you signed the longest loan term possible, it’s still possible to get out of debt fast. The best way to do that is to pay off the title loan early.
If you have the cash to spare, paying off a title loan can help you quickly clear your debts and get back to focusing on your financial goals. When you pay a loan off earlier than the contract stipulates, it is called “prepayment”.
How do I pay off title loan early?
You have two main options if you’d like to pay off your title loan early. It comes down to how title loans work, and what your lender offers.
1. Work with the lender to change the repayment terms
2. Make larger payments than you are required to
Consider the first option. When you apply for online title loans, you may be offered a 12, 24 or 36-month repayment term. If you initially signed a contract for a loan that lasted 36-months, you may come to realize that you don’t need that much time.
You can contact your lender and find out if it is possible to move to a 12 or 24-month repayment plan. This will mean a substantially higher payment. However, if you have no trouble making those payments, it can save you a lot.
The second option is also worth thinking about, and can be more flexible. Simply make higher payments than you are required to – when you can. If you choose to do this, you can pay your loan off earlier without being obligated to make a larger payment every month.
What are the benefits of title loan prepayment?
If you pay off title loan early, you can benefit in several important ways.
- Avoid the accumulation of debt from high-interest rates
- Regain the title faster so that you can sell the car
- Get ready for the next time you need emergency cash
Avoid the accumulation of debt from high-interest rates
Emergency cash loans can have high-interest rates compared to other types of loans. Paying them off as fast as possible helps you avoid seeing the principal amount just grow larger and larger. Even in cases where there are penalties, significant amounts of money can be saved through prepayment.
Regain the title faster so that you can sell the car
If you have plans for your automobile, you probably have to wait until you pay off title loan on it. After all, you no longer hold the title so you cannot transfer it to someone else. Paying off your loan faster lets you take control back so that you can upgrade or downgrade your ride.
Be ready sooner for the next time you need emergency cash
You never know when an emergency will strike. If you’re in a good position, paying extra right now can leave you loan-free the next time an accident does strike. If you’ve fully paid off one title loan, you can get another more easily when disaster strikes.
Will my contract prevent me from paying off a title loan early?
Whether or not early repayment is allowed depends on your lender and contract. Montana Capital Car Title Loans welcomes early repayment and doesn’t apply an early repayment penalty. Other lenders may not be as flexible.