A title loan uses a vehicle as collateral rather than a post-dated check, but shares the same short-term, high-cost structure as a payday loan.
How it works
The finance charge divided by the principal, times 365 divided by the loan term in days, annualizes the loan’s true cost into a comparable APR.
What this does not include
This doesn’t include the risk of vehicle repossession on default — a real, severe consequence beyond the pure dollar cost this calculator computes.
How to use this calculator
- Enter the loan principal, finance charge, and loan term in days.
Frequently asked questions
What happens if I can’t repay a title loan?
The lender can repossess and sell the vehicle used as collateral — a serious risk beyond simply owing more money, unlike most unsecured short-term loans.
Why are title loan APRs so high?
Short loan terms mean even a modest flat finance charge annualizes into a very large percentage rate — the same mechanic that makes payday loan APRs appear extreme.
Are title loans regulated the same way in every state?
No — state regulation of title loans varies significantly, with some states banning them outright and others allowing them with few restrictions.
