What Are Loan Terms?
If you need funds as quickly and conveniently as possible, an auto title loan is a great way to go. You may apply in multiple ways, and qualified applicants may get the money they need as soon as the next business day.³
But don’t call or start applying online just yet. Take just a minute to consider the loan terms that would work best for you.
What are loan terms? They include how much money you may borrow, the dollar amount of your monthly payments and how long you have to pay back the loan. That’s why you should have some idea of what you’d like to do before you start.
This part might sound simple at first: How much money do you really need? If you’re facing a financial emergency right now that necessitates a loan, you want to make sure you don’t burden yourself further by borrowing more than you need. Remember, you have to pay back the auto title loan plus interest.
Now, in order to figure out how much you may be able to afford in payments each month, do a quick budget calculation. Write down your monthly income and then estimate your:
- Rent and/or mortgage
- Insurance (auto, life and property)
- Auto loan payment(s)
- Cable, phone and internet
- Gas, water and electric
Also, include “entertainment” costs in there if you can afford it. Even renting a movie from a kiosk may help alleviate your stress!
Add up the bills and subtract that number from your monthly income. How much do you have left over? Based on that number, figure out how much you may be able to afford to pay each month on your auto title loan without going broke.
Do you want to make payments for 48 months? Would you rather stick to 24 months? The answer to those questions lies in the answers to these questions:
- Can I afford larger payments for a shorter loan term?
- Do I need to make smaller payments instead over a longer term?
- After I take care of my financial emergency, can I afford to pay back the loan early?
Don’t forget that a longer loan term means more money paid in interest. Yes, smaller payments might seem great now, but in the long run are you actually spending more money? If you’re nervous about making big payments in a short term now, it might be beneficial to set up a term that includes smaller payments for a longer period. That way, if later you can afford to make larger payments, you may pay back the auto title loan ahead of schedule and not spend as much in interest.
Getting an auto title loan may be a convenient way to get the money you need now. Just remember to consider what loan terms would be best for your financial future.