Car title loans can be costly, especially when compared to other forms of credit. Often, these loans are used for emergency and time sensitive needs. In these cases borrowers can overlook the costs. This can often be a mistake and can result in getting stuck in an unfavorable loan.
It is possible to negotiate a car title loan to get a better deal. This can certainly help ensure you get the best title loan available with a payment that is affordable. Negotiating a title loan should be done before signing the loan agreement. To understand how to negotiate a title loan it is important to first understand what one is and how your car is your collateral. If it is too late and you are already stuck in an unfavorable loan then consider a title loan refinance.
Your Car Is Collateral
Title loans are easy to get fast because you use your vehicle as collateral. This means if you default on the loan, the lender has the right to repossess and sell your vehicle to cover the costs of the loan. This is not ideal if you end up missing a payment or two.
Can you Negotiate a Title Loan?
A common misconception is that all title loans are not negotiable and take it or leave it. While not all lenders will negotiate, many will and it certainly doesn’t hurt to try. The worst that can happen is you end up with the same loan you would have had if you did not try to negotiate the title loan. The next question is how do you negotiate a title loan?
How do You Negotiate a Title Loan?
The best way to negotiate a title loan is to treat it like purchasing a vehicle. The best way to get the lowest price on a used vehicle is to find multiple dealers with the same car and visit each to get their best price. Let them know what the other is offering, and give each a chance to provide their best offer.
This can work with title loans also. Apply with multiple title loan companies and let the one with the higher rate know that you found a company offering a lower rate. Give them a chance to beat the rate and cost. This can reduce your title loan cost significantly.
Title Loan Negotiation Elements
Car title loan costs consist of two main elements:
- Interest – the cost of interest accruing on the loan
- Fees – various fees charged by lenders
Both interest and fees are candidates for negotiation.
How to Negotiate Title Loan Interest
The most common element of a title loan that you can negotiate is the interest rate. The interest rate will have a significant affect on your total loan cost so finding the lender with the lowest interest rate is a good idea.
Find out not only what interest rate the lender is charging, but also the total loan cost. This can vary depending on both the rate and the loan length. You can use the title loan calculator to get an idea of what different rates and terms result in.
How to Negotiate Title Loan Fees
Fees can also be negotiated. This can include loan origination fees, processing fees, and any other fees. While negotiating your title loan ask that all fees be waived. The worst that can happen is the lender says no, or agrees to waive all or part of the fees.
Negotiating a title loan is definitely worth doing for anyone moving forward with a title loan. It can’t hurt to ask for a lower rate and reduced or eliminated fees, so why not give it a try? If you have several title loan offers this becomes easier.