The first question most people will ask is: what is APR? APR stands for the annual percentage rate and tells you how much it will cost to borrow the money for your car for one year. Most times, the APR on car title loans are very high. APR rates are based on a few factors.
First, the original amount of money that you borrowed. Second, the monthly finance charge or interest rate. Third, how much you pay in monthly fees. And fourth, how long you plan on borrowing the money. An APR is not required to take out a care title loan but is sometimes necessary for loans that need to be more than a month long. For example, if you need to borrow five hundred dollars and plan to repay the money in one year, you can compare the costs of borrowing that money. The bank or credit union might have a loan APR of 7.5%, which means that you would pay $21 in interest to borrow your desired amount. A credit card has an APR of 20%, which means that you will pay fifty-six dollars in interest to borrow five hundred dollars. The most expensive APR is a car title loan, which requires 300% of interest to pay back the loan. This would mean that you paid $1,111 to borrow a mere five hundred dollars.