Car title loans are often helpful when you need money fast for an unexpected expense. But because they often have high-interest rates, it’s important to prioritize paying them off as quickly as you can. Or if you can’t pay off your loan quickly, you’ll want to follow the steps below to reduce the amount you owe over the long run. Here are some strategies to help you get rid of your secured debt so you can own your car free and clear.
Once you’re ready to discharge your auto title loan, there are a number of ways to make your final payment. You can send a payment in the mail, get a money order, or pay online from your phone or computer. Most lenders also have retail locations that you can visit to pay off your loan with cash or a check.
Why pay off a title loan early
Car title loans often have interest rates that come in much higher than installment loans and personal loans. According to our title loan calculator, you could end up paying $250 in interest just to borrow $1,000 for 30 days. Of course, the rates are higher because most companies won’t obsess over your credit score. Instead, they want to know if you have enough vehicle equity to serve as collateral for the loan.
But if your loan doesn’t have any early payment penalties, you may be able to save some money by paying the balance off before it’s due.
Getting out from under your loan early can also help you avoid incurring late fees and rollover fees. These charges can really add up and if you don’t have a payoff plan or budget in place it will be difficult to get ahead of the payments. More than 80% of online title loans are renewed on the day they’re due and not paid back early, because borrowers can’t afford to repay them.
Most online title loan companies charge high fees for rollover payments, which can make it even harder for cash-strapped borrowers to pay them off. About 20% of borrowers end up losing their cars because they can’t afford the high-interest costs associated with their loans. To avoid getting stuck in this debt cycle, it’s important to pay off your loan quickly, even if you have to make some sacrifices to do it.
How to get money to pay off your title loan early
When money is tight, it can be hard to come up with the cash you need to pay off your loan. Here are a few strategies to discharge your debt and avoid a scenario where you can’t pay back your title loan online.
- Borrow money from a family member. Although it’s difficult to talk to loved ones about finances, borrowing money from family can help you get back on your feet and will cost less than rolling over your loan.
- Refinance. If you have decent credit, you may be able to refinance your car title loan into a personal loan with a longer-term and lower interest rate.
- Get a side hustle. Pick up some freelance work or sign up for gig apps to earn some extra money to put toward your loan.
- Sell valuables. Parting with treasured belongings is difficult, but selling valuables can help you get out of debt and avoid losing your car.
- Reevaluate your budget. Take a look at your budget and make sure it’s as lean as possible. Cut out any unnecessary expenses like takeout and subscription services.
- Settle your debt. If you don’t have enough money to pay off your loan in full, some lenders may allow you to settle your debt for a smaller lump sum.
- Negotiate new terms. If the online title loan lender won’t settle your debt for a lower amount, see if you can negotiate new terms like a longer repayment period or a lower interest rate that will make the loan more affordable for you. You’d be surprised at how many companies will negotiate new terms, even for no income verification vehicle title loans.
How Much Time Do You Have To Make Extra Payments For Car Title Loans?
Car title loans usually have higher rates than other types of loans, so it’s best to pay them off early to save on interest. Most people don’t know you have a certain amount of time to pay off the loan or even refinance to avoid the huge interest payments or other penalties. Once you have the means to pay off your loan early you need to contact the lender. Do this within a few days or weeks of knowing you can make an early payoff. Consider refinancing the amount owed or working with the lender to come up with an alternative payment arraignment. With these strategies, you may be able to come up with the extra money you need to discharge your loan on time, or even ahead of schedule.