Payday Loans vs. Title Loans: What is the difference
Car title loans and payday loans are two types of short-term loans. If you’re in a hurry and need money fast, you are probably considering one of these loan options. Researching is crucial to know which type of loan best fits your needs and your current financial situation. Payday and car title loans are not that different.
Both are different ways to obtain immediate cash without going through a thorough credit check or being buried under a pile of paperwork. When you need quick money and can’t wait for a bank’s loan approval, you can resort to one of these short-term loans.
A payday or title loan can get you out of a money emergency, so you can hang on until your next paycheck. Still, regarding your money, you should always be careful.
Be careful not only to choose the right type of loan but also to borrow it from a trustworthy lending business. Since almost all of these lending processes are done online, choosing a reliable lender such as Loan Cheetah is the safest way.
But which loan is best for you? These are the main differences between a title loan and a payday loan. Make sure to check them before deciding on which loan to go with.
Car Title Loan
When applying for a car title loan, your car acts as collateral. The lender will hold your vehicle’s title until you’re off the debt. The process is quite fast; it’s usually done in a couple of hours, meaning you’ll get your money in 24 hours or less.
Getting approved is fairly easy; you only need to be 18 or older and own a car title. How much money you can borrow relies on the worth of your car. Most providers lend from 1,000 to 10,000 dollars. Different situations can lead you to need a big sum of money fast.
Maybe you ran into a good business opportunity, or you are facing a money emergency. If that’s your case, then this option is perfect for you. Another great thing about car title loans is that the interest rates are relatively low.
Once you are given the money, you’ll have to repay in about 30 days. But you can also arrange monthly payments if that’s more convenient for you; you’ll have the chance to discuss that with your loan provider.
Title loans are a good option because even though you use your car as repayment insurance, you can still drive your car. You only give your title to the lender as a guarantee.
You don’t need a good credit score to apply for this type of loan; your vehicle is all the nuance lenders ask for. If you’re looking for a fast way to get your hands on some cash and own a vehicle, then a car title loan can be the right move.
Payday Loans
On the other hand, when applying for a payday loan, you won’t be asked to give the title of any of your assets. Loan providers give you the money in exchange for a postdated check.
The bill’s total will be the sum of the loan plus the finance charge. Payday loans must be paid around 15 to 30 days after receiving the funding. This type of loan is unsecured, so you’re asked for a postdated check.
At a payday loan agreement, you don’t put any of your valuable assets at risk. However, payday loans tend to have high-interest rates. If you fail to repay in time, you can end up with a huge debt.
Payday loans are perfect if you need a few bucks fast to cover some expenses or navigate an unpredicted emergency, for example. This type of loan aids you until you cash your next paycheck.
With this type of loan, you can borrow only a couple hundred dollars – from 100 to 1000, in most cases. Since car title loans are not available in many states, sometimes payday loans are not only the best but the only option for you.
Car title loans and payday loans satisfy different needs. Consider the pros and cons of both loans before making your decision.
