What is the interest rate on title loans?

Quick Answer The interest rate on title loan is typically around 300% APR (25% per month). Rates vary depending on the lender and specific state regulations. Some states enforce interest rate caps and limit fees to lessen the overall cost of title loans.

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Tobi Opeyemi Amure • Answer updated on Jun 14, 2023

Fact checked by Doreen Dumesle

Title loan interest rates vary widely, but they're generally quite high.

You can find rates as high as 25% - 36% per month (that's 300% - 432% APR) or as low as 8.08% per month (that's roughly 97% APR) for a title loan — it's all about location. 📍🗺️

Title loans are known for their ease, speed, and... hefty price tag. Depending on where you reside, title loan interest rates can vary quite a bit as their cost hinges on the lender you choose and your state's regulations. Though, you can expect these loans' monthly finance charges to sit no higher than 36% in most states — thanks to state legislation and consumer protect laws put in place in recent years.

Learn: What happens if you don't pay a title loan back?

However, be advised, that not all states have implemented consumer protections or rate caps for these types of loans. If you are a resident of a state that doesn't regulate title loans, understand the end-all cost of your loan before signing and borrow with extreme care.[1]

High interest rates for title loans stem from the risk lenders undertake with these types of loans. Title loans often do not require a credit check, which inherently means more risk for the lender. Since title loan lenders don't evaluate creditworthiness and — in turn — stand a higher chance of not recouping their money, they charge higher rates to cover their potential losses.

Learn: Can you be arrested for not paying a title loan?

Below are a few more factors that can greatly influence title loan interest rates that you should keep in mind:

  • Location: Different states have different regulations that can affect interest rates.
  • Lender's Policies: Individual lenders' risk assessments and policies can influence the rates charged.
  • Loan Terms: The amount of the loan and its duration can also impact the interest rates. Larger, longer-term loans often have higher rates since they’re riskier.
  • Credit History: Although less significant for title loans, a borrower's credit history might still have an impact on rates.
  • Vehicle Condition and Value: The state and value of the vehicle used as collateral can affect the interest rates. A vehicle in better condition or with higher value typically leads to more favorable rates.

  1. More states look to cap consumer interest rates at 36% ↩︎

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