The interest rate is one of the most important parts of any loan, because it determines how much you’re going to be paying for that loan. State regulations determine title loan interest rates, which means that how much you pay for your title loan will depend quite a bit on what state you’re in.
Title Loan regulations in Texas can get a bit tricky, and that’s why we’ve put together this title loan guide so that you can understand what type of interest you’re looking at, other potential charges and how you can get the best deal on your loan.
Title Loan Interest Rates in Texas
At a glance, title loan interest rates in Texas seem simple enough, as the law puts the limit at 10 percent.
Although this is true and all title loan companies in Texas must follow this interest limit, there can be additional fees on your title loan. In Texas, many title loan companies also function as credit access businesses. A credit access business is one that sets up a loan between a borrower and a third-party lender.
If the title loan company is also a credit access business, then it is essentially facilitating your loan with another lender. The lender can charge you that maximum 10 percent, but the credit access business can charge you fees.
ZERO Percent Title Loans in Texas
Another aspect of the title lending industry that is unique in Texas is its 0-percent title loans, which aren’t found in any other states. These title loans work the same way that a credit card with an annual percentage rate (APR) of 0 percent would work. There is an introductory period that’s specified in your loan agreement, and the title loan company won’t charge you any interest during that time period. If you pay the loan off by the end of that introductory period, you’ve essentially borrowed that title loan for free.
There really isn’t any downside with 0-percent title loans, but you should keep in mind that if you can’t pay it off by the end of the introductory period, you’ll need to start paying interest and fees on it. This makes sense, since obviously a title loan company or any lender can’t give you money and never charge you interest. They would go out of business quickly that way.
Paying Off or Extending Your Title Loan
One of the many title loan benefits is their flexibility. Although you’re supposed to pay off the title loan on the due date, you can pay just the interest and fees to extend it for another term. Title loan terms are usually 30 days. Texas has a maximum title loan length of 180 days, which means that on a 30-day term, you’re looking at five extensions, at most, before you must pay off the entire title loan.
Extending your loan isn’t ideal, since you end up paying more in interest and fees, but it’s convenient if you’re low on cash when your payment is due. If you didn’t pay at all, then you’d be defaulting on your loan, and the lender would have the right to repossess your car. Once they repossess it, they can sell it. Many people wonder how to avoid title loan repossession, but it’s really as simple as making some sort of payment and staying in communication with the title loan company about payment issues.
Looking into a Title Loan
If you’re interested in a title loan, we can get you more information about it and connect you with a lender in your area. It’s a simple process that goes as follows:
1. Enter your vehicle information in our online application, which is available on our homepage or by clicking the Apply header from any page.
2. Enter your basic contact information on the next page of the application form.
For vehicle information, we’ll just need:
• Year
• Make
• Model
• Style
• Approximate Mileage
For contact information, we’ll need:
• Your full name
• Your phone number
• Your email address
• Your ZIP code
Once you’ve submitted this form to us, we’ll provide you with your title loan instant quote and follow up with you regarding a potential loan. That quote will give you an idea of the amount you could borrow with a title loan, assuming that your car is in good condition.
When we get in touch with you, we’ll give you the information of a lender in your area. You can go to that lender to get your title loan. This takes all the guesswork and searching out of the title loan application process, as all you need to do is fill out our form and we’ll handle the rest.
The law requires all lenders to clearly explain any interest and fees that will be charged on a title loan. It’s good to know what title loan interest rates and fees can be in Texas, anyway, but as long as you pay attention during your loan application, you’ll be fully aware of how much your loan will cost.