Payday vs Car Title Loans: Everything You Need to Know

Not all loan options provide same-day or next-day funds – but – there are options, such as title loans and payday loans, that offer fast cash and enable borrowers to deal with a sudden emergency.

The thing about payday loans and car title loans is that even though these are tempting – they are expensive due to their higher interest rates, and if you fail to repay within the agreed-upon framework, it can lead to a cycle of debt.

If you are looking for fast cash options, you might want to learn more about how these loan options work.

Keep reading!

Car Title Loans: An Overview

Car title loans, also known as title loans, are short-term loans that last 15 or 30 days. By applying for title loans, you use the title of your car, truck, boat, motorcycle, and RV as collateral. In connection to the vehicle’s value, you can get 25% to 50% of the car’s value.

Typically, the borrower is required to provide the lender with the documentation of the car’s title, photo ID, and proof of income, along with the application form. The borrower is also required to own the vehicle. Some lenders also demand that their borrowers provide them with a duplicate set of car keys and install GPS so that they can track the car.

The borrower has to pay an average of 25% monthly fees along with the lender’s finance charge. Suppose you are borrowing $1000; in this case, you will have to pay a monthly fee of $1200. So, you get the point – car title loans are more expensive than other loan options.

But – if you fulfill all requirements, you can get the loan on the same day – if not – then on the very next day. If this sounds good to you, you might want to submit your loan application with San Diego title loans.

If you fail to repay a title loan within the given time frame, the lender might expand your deadline – but – it will add to the interest rate and the fees of the total amount you owe in the end.

Payday Loans – An Overview

Similar to car title loans, payday loans are short-term loans, which usually start from $500. Typically, payday loans are to be paid within two to four weeks. Payday loans are also known as cash advance loans and are available in most states.

Typically, the borrowers must provide the lenders a personal check for the required amount and the loan fees. The borrower might also authorize the lenders to electronically take the amount of the loan to align with the fees from your bank – if you don’t repay the loan on time.

Similar to title loans, payday loans are a bit on the expensive side. Typically, lenders will charge $10 to $30 for each borrowed $100. Also, the fee for every $100 is typically $15 – so you will be paying $75 for a $500 loan.

Like with car title loans, if you fail to repay the loan on time, the lender might extend their due date – but – you will have to pay another fee.