Finding The Right Loans

Finding The Right Loans

3 Differences Between A Car Title Loan And A Payday Loan

April George

When you need some money to pay an unexpected expense and have nowhere to turn, there is a solution. You can apply for a car title loan or a payday loan. These are both excellent options, and while they are similar in some ways, they are also different in others. Here are three of the top differences to know about if you are thinking about using a car title loan or payday loan to get cash now.

Collateral

The most obvious and significant difference between a title loan and a payday loan is the collateral requirement. When you get a payday loan, you do not have to provide collateral. The lender issues you a loan based on your incoming earnings from your employment. You submit pay stubs to prove you have a job with income, and the lender gives you a loan based on that factor alone.

You cannot get a title loan without collateral, and the collateral you need is a vehicle title. You must own a car and have the title in your possession. You cannot qualify without the title, as you must surrender it to the lender in exchange for a loan.

Amount of the Loan

The second difference is the amount of the proceeds from each loan type. A payday loan generally offers a lower amount of cash upfront compared to a title loan. However, some factors affect the amount you can get from either type. For a payday loan, you might only be able to borrow a certain percentage of your normal weekly earnings. For example, if you earn $500 a week, the lender might only offer to give you $250.

With a car title loan, the lender bases the loan amount on the value of the car. If your vehicle is worth $1,000, the lender might offer $300 or $400. If your car is worth $5,000, you might be able to get $3,000 for it.

The Time It Is Due

The time in which the loan is due might also differ between a payday loan and a car title loan. Payday loans typically have shorter due dates, such as two weeks. A car title loan might give you more time than this to repay it.

As you can see, title loans and payday loans are different in some ways, yet both offer financial relief when you need it most. Talk to a lender to find out which option is right for your situation.


Share  

2020© Finding The Right Loans
About Me
Finding The Right Loans

When you start thinking more seriously about how to manage your finances, it is worth saying how important it is to find the perfect loan. While the right loan could help you to pay down debt without worrying a lot about the repercussions, the fact of the matter is that some people don't research loans as extensively as they should, causing problems. The purpose of this blog is to find great loans that could help you along the way. Check out these posts that talk about everything from narrowing down loans to identifying ways to identify lower interest rates. Check out this information to make sure you have what you need.

Categories
Archive
Tags