What is Negotiable on a Car Title Loan?


Every year in the United States, 2 million people use their car or truck title to secure a loan. So, if you’re planning to get a car title loan, you’re not alone.

A car title loan is secured against your vehicle. Most lenders won’t take custody of your car while the loan is in service, but if you default the loan, car repossession beckons. In fact, about 200,000 people will lose their cars to repossessions every year.

To make the most of these loans, it’s prudent to ensure you’re getting the best possible deal. This means putting your negotiating skills to use. But what can be negotiated on these loans?

Read on to find out!

The Interest Rate

Did you know car title loans have an average monthly rate of 25%?

To put this into perspective, if you take a $1,000 car title loan that’s repayable in a month, you’ll pay back at least $1,250. We say “at least” because there are other additional charges that could be levied on the loan, including loan origination and document processing fees.

Whichever way you slice it, this isn’t cheap and no one should be taking out these loans. Unfortunately, millions of people find themselves in a situation where they’re unable to get low-cost loans from traditional banks. Their only option is to use their car titles to get credit.

The good news is the interest rate is negotiable. While the lender isn’t going to cut by a lot of percentage points, even a slight drop can result in big savings. For instance, getting an 18% rate instead of 25% will make a $1,000 loan cost you $180 a month.

To give yourself some leverage on the negotiating table, it helps to have a car that’s in sound condition and can fetch a good amount in the used car market.

Loan Term

Although car title loans are typically short term (15-30 days), it’s possible for them to stretch out to a year. Most lenders will make you a short-term offer, but you can negotiate for a longer term if that suits your finances.

Here’s the catch.

A short-term loan will require a higher repayment. For instance, a 30-day $1,000 loan with 25% interest will need you to pay at least $1250 at the end of the month.

A longer-term loan is more expensive overall, but the monthly repayments can be lower. For example, a 12-month, $1,000 loan with 25% interest will need you to pay about $333 every month for a year. However, you’ll eventually end up paying a total of $4,000!

Pricey, yes, but if your finances only allow for smaller monthly repayments, it might be worth it negotiating a longer loan term.

To protect your finances, don’t borrow more than necessary. This is a common mistake borrowers make. Have a look to learn about other common car title loan mistakes to avoid.

Be Smart About Car Title Loans

Car title loans are expensive and often predatory, no question about it. However, they can make a world of difference when you’re in a financial emergency. It’s not all gloomy, though, since you can negotiate a car title loan and get better terms.

Explore our blog for more helpful financial advice.


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About Marc Wallace

I'm never too busy to share my passion. I've created this page to help people learn more about business, finance and real estate. Besides all the serious stuff, I'm also a man that values family and healthy relationships. I hope you find my content insightful.

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