A car title loan is simply a loan gotten from a bank or financial institutions using your car title as a collateral. It is also referred to as a pink slip loan or a title pawn. In this short article i will explain how to calculate title loan rate using the simplest approach.
Car title loans usually last for 15-30 days and are for an amount that is usually 25%-50% higher than the value of the car.
The Annual Percentage Rate (APR) of a car refers to the percent of your loan balance that you pay yearly, for car titles it is relatively higher. You can calculate your APR using the following steps;
It is important to look up the length of loan terms in weeks and the cost to borrow the amount you need. You can easily find this in the car title loan information.
Divide the amount of weeks in the duration of your loan by 52 to ascertain how many terms there would be per year. For instance, the usual two week term would be 52/2 giving 26 terms per year.
For example, if a lender charges $60 in fees and interest for a car title loan of two weeks, you multiply $60 by 26 to get $1,560.
To calculate this, you divide the annual cost by the amount you are borrowing and multiply the result by 100. If your title loan is $500, divide $1,560 by $500 and multiply by 100.
This will give you an APR of 312%.