By definition, the annual percentage rate (APR) is the percent of your loan balance that you pay per year as a cost of borrowing money. The cost can include both interest and fees. With a car title loan, you usually borrow the money for a few weeks or months, not a whole year, but you can still calculate the APR to understand the equivalent annual cost of borrowing the money with those fees. In general, car title loans charge a much higher APR than most other types of loans.
Look up the length of the loan terms in weeks and the cost to borrow the amount you need for that long. You can find this on the car title loan information or by asking the lender.
Divide 52 by the number of weeks in the car loan term to find out how many terms there would be per year if you were to borrow the money. For example, with the usual two-week term, 52 / 2 gives 26 terms per year.
Multiply the total cost per loan term by the number of terms per year to calculate how much you would have to pay to borrow the money for a year. For example, if the lender charges $50 in fees and interest to get a title loan for two weeks, multiply $50 times 26 to get an annual cost of $1,300.
Divide the annual cost by the amount you are borrowing and multiply the result by 100 to find out what percent of the loan amount you are charged in interest and fees each year. If your title loan was for $400, divide $1,300 by $400 and multiply by 100 to calculate an APR of 325 percent
Because of the high cost of borrowing with a car title loan, consider borrowing the money through another source. Options include a personal loan from a bank or credit union, a credit card cash advance or a loan from a friend or family member.