How Much Interest Will I Pay on a Title Loan?

High interest rates are a hot button topic in the title loan business. Some may suggest that you steer clear of such loans because of them.

So, how much interest will you actually pay on a title loan? What will happen if you don’t pay it off on time? Is it worth it? Let’s examine the answers to these questions below.

How Much Interest Will I Pay?

According to, title loans typically cost the borrower approximately 25 percent in interest over 30 days. Note that this interest rate will add a lot to your payment quickly if you don’t pay your bill off on time. 

So, suppose you take a title loan out worth $1,000 to keep the water company from cutting off your water. Let’s say that you’re expecting to earn enough from your job or another source of income to cover the loan within 30 days. You’d end up paying $1,250.

That may sound like a lot of money. However, it is just a fact of life that things cost more when they are in high demand. For example, people tend to drive more in the summer than in the winter, which is why gasoline prices are typically at their highest point during the summer.

Look at it this way – in this example, you’ll pay $250 for peace of mind and to keep your household supplied with water. It may not be a dream scenario, but it’ll get you out of a bind. Besides, you are probably looking for a title loan because the bank won’t lend to you, anyway, so what good are their lower rates?

The Importance of Paying Your Loan on Time

Let’s look at what will happen if you pay your $1,000 loan back on time, a month late, 2 months late and so on.

The table below shows how much you will have to pay back at the end of each month (including the principal) that you do not pay the bill off. It also lets you know whether or not the lender will be able to sell your vehicle after that particular month. It assumes a 30-day loan with a 25 percent interest rate that is compounded monthly.


Month Amount Owed Can Lender Sell My Car?
1 $1,250 No
2 $1,562.50 Yes
3 $1,953 Yes
6 $3,815 Yes
12 $14,552 Yes

As you can see, being late by even 1 month will add hundreds of dollars to your bill. If you are late by 6 months, you’ll add $2,565 to the $1,250 that you would have originally paid. After 1 year, you might as well let them keep the vehicle, as most used vehicles do not appreciate for anywhere near $14,552. Note that I say that tongue-in-cheek, as it is not a good idea to be that late with your payments!

Is a Title Loan Worth It?

You are probably in the market for a title loan because a bank would not lend you money in the first place. Right off the bat, your options are limited.

A title loan may be worth the cost if you are reasonably certain that you’ll be able to pay it off on time. Basically, if you anticipate earning enough to cover this and your other bills in the near future and just need some quick cash to hold you over, then a title loan may be the way to go. In this sense, think of it as a bridge to get you to a better financial standpoint.

Be sure to do everything that you can to pay off your car title loan on time. Remember, even waiting a month too long will cost you hundreds of dollar. Just use your loan to pay off whatever urgent expense you had in the first place and then immediately jump on your loan payment to ensure that it does not become another mess for your financial life.

Please note that Car Cash Loans makes loans at rates that are less than one half of the rate shown by, and to keep your monthly payments as low as possible, they will even give you up to 5 years to pay it back!