With the surfeit of alternatives available in most states regarding short-term loans, it can become quite confusing when deciding on which alternative to opt for. In dire circumstances, your best bet is to find loans that offer quick cash, low interest rates and a flexible payment schedule. After excluding most options, the final dilemma is to decide between title loans and payday loans.
The question that arises is whether there is a difference between the two and which one of them is better? Title loans for cars are meant to provide quick cash to owners of cars who receive amounts proportional to the equity of their car. Payday loans, on the contrary, are not based on your assets but rather, on your income. The latter, however, provides lower loan amounts with higher interest rates.
When confronting a financial hardship, these title loans for cash offer borrowers financial assistance right when they need it the most. This is a befitting option for those who lack a good credit history because these title loans do not entail any credit checks, making it easier for such people to obtain loans. Moreover, it is also a means to enhance your credit score because the payback terms are so flexible that almost anyone can easily return the money within the given duration.
Also, online title loans are accompanied by a hassle-free and easy application procedure. Of course, some requirements need to be met but these are minimal and the documents that are needed are also very few like your state ID and driver’s license. Consequently, the loan that you obtain can be used in any manner you like and you don’t even lose access to your vehicle.
On the other hand, payday loans are rather expensive because their APRs can range between 390 and 900 percent which amounts to almost $25 for every $100. Even the fees charged by payday loan providers can be high and variable. This raises the cost of borrowing, leaving the financially unstable person in a more pathetic state than before.
Secondly, payday loans can become uncontrollable i.e. they can grow at an incredibly fast rate which might result in an inability to repay the loan. This can leave you with bad credit scores. If, for example, your payday loan provider does give you extensions for repayment of the loan; that too will be detrimental because your interest will accumulate significantly.
Thus, if you are ever in need of short-term loans, car title loans quotes are a more viable option than payday loans because they do not exploit your situation, unlike the latter mode of obtaining loans.