What is the Average Interest Rate of A Car Title Loan?
The thing that makes car title loans a bad idea is the incredibly high interest rate associated with them. Many states have banned them because of the fact that car title loans have been grouped into the predatory lending category. Their interest rates are even higher than credit card companies who take advantage of those with bad credit. If you think rates of 25% APR are high, imagine rates of 250%. Keep in mind that a monthly interest rate of 25% equals 300% APR. If you're paying $400 a month interest only on a $3,000 loan, after 7 months you will have paid $2,800, which is almost the principle balance, while still owing the full, original $3,000. Read the fine print and think carefully before attempting to get any kind of car title loan. The high interest rates are not worth, and in most cases, you would be better off getting a loan from a friend or family member.