As convenient as title loans are, it can be challenging to pay off your full loan amount along with the interest charges and fees at the end of a 30-day term. If you want a title loan that you can pay off over a series of installments, you may be wondering how to get a long term title loan.
It’s important to understand that title loans are intended to be short term loans. In fact, title loan companies are usually required by law to provide you with documentation explaining that. If you’re trying to find out how to get a long term title loan, the first thing you should do is reevaluate what you need the loan for and compare a title loan to your other options.
Still interested in getting a long term title loan? The following information could help.
How to Get a Long Term Title Loan
Perhaps you’re not satisfied with your other loan options or you don’t have the credit score to qualify for another type of loan. In that case, you need to check out your state’s laws regarding title loan terms.
Every state sets its own limit on title loan terms, including minimum and maximum lengths. This means that before you start looking into long term title loans, you need to know if that’s even allowed in your state, otherwise you’re just wasting your time.
Most states provide some flexibility regarding title loan terms, but even so, title loan companies will go with a standard length of 30 days. One of the few exceptions is Virginia, which requires title loan terms of at least 120 days but not longer than 12 months.
Title loan places in Texas can set up terms for a maximum of 180 days. If you’re getting a title loan in Texas and want something long term, that’s the longest you’ll be able to get. Of course, you would still need to find a title loan company that will set up a term for that long.
One option is to simply get a title loan for the standard 30-day term, and then extend it as necessary. Almost all title loan companies will allow you to extend your title loan by paying the interest and fees for the current term. You can then start up a new term with the unpaid loan principal.
The problem with this is that you’ll have more interest charges and fees for the same amounts in the new term. You’re essentially just pushing back your title loan, but paying more money to do so. By the time you reach the 180-day limit, you’ll have a balloon payment because you’ll need to pay off the entire unpaid balance on your title loan.
Saving Money on Title Loans
A much better option is to get a short term title loan and pay it off on time to save as much money as you can. One way to do this is with a zero percent title loan, which is a popular option in Texas. Here’s how it works:
1. You apply for the title loan with the lender.
2. The lender issues you the loan with a zero percent introductory interest rate.
3. Pay the loan off by the due date and you’ll only need to pay the loan principal without any other charges.
If you fail to pay off the loan by the end of that introductory period, you will end up getting charged interest moving forward.
The obvious benefit of zero percent title loans is right there in the title – no interest under the right circumstances. You won’t be able to get these types of title loans over the long term, but it’s worth seeing if you can make it work and save yourself the money.
Another way people try to save money on their title loans, both for short term and long term loans, is by looking for tax deductible title loans. This method tends to be less effective, although it can work in select circumstances.
The Internal Revenue Service (IRS) has strict rules about what is and isn’t tax deductible. For the most part, the interest you pay on a title loan won’t qualify. This isn’t unique, as it’s the case for interest on most types of loans.
There may be an exception if you’re planning to use the money you obtain through your title loan for business purposes. Personal loans, including title loans intended for personal use, won’t qualify for any tax breaks. Title loans that you intend for business use do.
Let’s say that your business vehicle breaks down and you take out a title loan to pay the repair cost. Because you’re using the title loan for your business, any interest you pay on the title loan will be tax deductible. This makes a title loan a smart way to get money when your business needs it, and then write off what you pay for interest.
Make sure you keep accurate records if you do this, that way you can protect yourself if the IRS audits you. It’s also a good idea to consult with a tax professional about it.
Looking for Loans with Longer Terms
As mentioned, title loans don’t really fit if you need something long term. That’s not the way they’re set up. If you need a loan for 30 days, a couple months or even six months, a title loan could be a great choice. If you need a loan for a year or more, you’ll need to consider other options.
These other options include banks, credit unions, online lenders and peer-to-peer lenders, all of which have loans with multi-year terms available. Now, if you don’t qualify for any of these options because of credit score issues, there is a way that a title loan could help you.
Two of the most important factors in determining your credit score are your payment history and the amount of your credit that you’re utilizing. If you’ve had trouble paying your bills and you’re using 30 percent or more of your available credit, that can decrease your score quite a bit.
Here’s how you can boost your credit score with a title loan:
• Pay off any current and outstanding bills using the title loan – this will solve your payment history issues.
• Pay off your credit cards with the title loan – this will lower your credit utilization.
The effect may not be immediate, but your credit score should rise over the next three to six months. You can pay off the title loan or extend it if necessary while you wait for your credit score to improve. Once your score is higher, you’re much more likely to qualify for long term loans through other lenders.
Since there aren’t any long term title loans out there, you need to get creative if that’s what you need. The method outlined above can work well to rebuild your credit and help you get a long term loan.