3 Standard Payment Methods for Your Car Title Loan

A car title loan is not the same thing as an auto loan. An auto loan is used to purchase a vehicle; this is usually an installment debt. A car title loan is a cash advance using equity in the car as collateral. There are many options to structure this loan.

#1 Standard Repayment

Standard repayment is a consistent installment plus interest until the loan is paid off. The standard payment is agreed upon at the origination of the loan, and it will not vary throughout the life of the loan. This option is the most predictable, but it is the least flexible.

#2 Revolving Debt Repayment

Revolving debt is like credit card payments; you are allowed to spend as much or as little as you need in a month. You are also able to pay down the debt at any time. In exchange for this extreme flexibility, interest rates tend to be higher.

#3 Graduated or Variable Payment

If you would like to reduce expense at the beginning of the loan, a variable or graduated repayment plan may be an option. With this choice, you pay the lowest amount in the first few months or years and then begin paying higher monthly payments in the future. This can be very risky if you fail to increase your income in the future as expected.

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