Title loans are one of the most popular loan options on the market, and we receive plenty of online title loan applications from prospective borrowers every day. But there are those who wonder are title loans a good idea because of their interest rates. The amount you’re charged in interest will depend on the state […]
Title loans are one of the most popular loan options on the market, and we receive plenty of online title loan applications from prospective borrowers every day. But there are those who wonder are title loans a good idea because of their interest rates. The amount you’re charged in interest will depend on the state where you get the title loan, but it is something to consider, especially since these loans have short terms.
You don’t want to end up stuck in title loan debt. Fortunately, many lenders offer what are called zero percent title loans. If you use one of these correctly, you can essentially borrow money without paying a cent in interest. Want to learn more about how this type of title loan works? This guide will tell you all that you need to know.
What Makes Zero Percent Title Loans Different
To understand how zero percent title loans differ from your typical title loan, it’s important to understand how title loans are normally set up. Title loans usually work as follows:
- You receive approval from the lender to borrow a certain amount, which will be your loan principal.
- The lender charges you that loan principal plus interest and potentially fees, setting the due date for the end of the title loan’s term.
- You must pay the full amount by the due date or extend the loan by paying just any interest and fees on it. You would then begin a new term with the loan principal, plus new interest and fee charges.
The difference when you get a zero percent title loan is that there is no initial interest or fee charges. On your due date, the only thing you need to pay back is the amount that you borrowed. It works similarly to zero percent annual percentage rate (APR) credit cards, where there’s an introductory period during which you don’t accrue any interest.
What Happens If You Can’t Pay Back Your Loan?
The question you may have is what happens next if you get a zero percent title loan and are then unable to pay it back by the due date.
The rest of the process is very similar to what would happen with a normal title loan. You don’t need to pay anything, and instead you can refinance the loan, which means you’re starting a new term with a new interest rate. There could also be fees for this new term.
At the end of that new term, your payment will be the loan principal, along with whatever interest and fees the lender charged you. You can also go through the normal extension procedure if you need more time to pay the loan back.
You could look at zero percent title loans as title loans that give you one free term when you don’t need to pay anything extra.
The Best Title Loan Option
There are really no disadvantages to getting a zero percent title loan. No matter what happens, you’ll pay less in interest than you would have if you got a traditional title loan.
It’s a good idea to see if there are title loan companies in your state offering this type of title loan. In some states, they’re more common than others. Texas is one state that’s known for offering this type of title loan, which has even led to the term “Zero Percent Texas title loan.”
We can help you find lenders offering this type of loan in your area. All you need to do is click the Apply link on the header menu and proceed through our online application, which requires the following information:
- Your car’s information, including its year, make, model, style and an estimate of its mileage
- Your contact information, including your full name, your cell phone number, your ZIP code and your email address
Not only will we provide you with a title loan estimate when you complete that form, we will also have one of our helpful loan reps call you as soon as possible. They can answer any of your questions and help you find a title loan company in your area offering zero percent title loans.
Being Smart with Your Title Loan
Whether it’s a zero percent title loan or not, you should have a plan in place for how you’re going to pay it off in full on the first due date. This will keep your interest and fees to a minimum.
Your plan could involve a financial windfall through a tax return, picking up some extra hours at work, selling some property or something else. Just make sure you know how you’re going to get the money to pay the loan off.
If you do this and get a title loan with that zero percent interest rate, you’re in an excellent position to borrow money without paying anything. These title loans give you the perfect opportunity to pay an emergency expense or finance an important purchase, and it’s a good idea to take full advantage.
