subject: Car Title Loans Vs Payday Loans [print this page] Among various types of lending there is car title. This is a loan that a car owner can take. In this case a car works as collateral; this is a way to get fast cash. Such loans are similar to payday ones and they are also supposed to help in emergency situations. There are other names such as auto pawn and installment loans but basically they mean the same. The main requirement is to be a full owner of a car as in case of other claimers, the loan cannot be obtained.
One of the greatest disadvantages of car title loans is that there is a risk to lose the vehicle in case of non-repayment. According to the agreement a borrower signs, it is required that the loan with the interest should be repaid in time; otherwise, the right for the car is transferred to a lender. Depending on the cost of the car in accordance to the blue book values a person is entitled to get a certain amount of cash, which is generally a third and less. One more peculiarity is that even if 80% of the loan is repaid, there is a chance to lose the car.
One more thing about car title loans is that people tend to ask more than they actually need. Sometimes the emergency requires only $500 or so but taking into consideration the potential of a car, a borrower can apply for more and find themselves in quite a lot of trouble.
As opposed to car title loans, payday loans are more convenient. They are absolutely different and are short term and unsecured. This means that they do not require any collateral, be it a car or anything else. They are generally given for a period of 2 weeks under certain interest and can be obtained by almost every citizen of the country. The requirements for such loans are very few and lenders are very lenient when it comes to credit checks. Bad credit is not a problem.
These loans are regulated by state laws. There are states where they are basically not allowed and the states where serious limitations are set on the lenders. These limitations refer to the amount of a loan and interest mostly.
Despite of the differences both payday loans and car title loans can be obtained online and without much waste of time. Generally, such loans are transferred to a persons bank account within one working day, not later than 24 hours. The approval takes also little time and the rate of rejection is very low. In fact, car title loans take a little longer to be processed as a vehicle is involved and is requires evaluation of its condition.
Those people who are lucky to have a car to pledge as collateral generally apply for this option. It is safer to some extend and costs less in terms of rates. All the others are left with a payday loan option. In fact, this is quite a good option for the individuals on tight budget and unexpected expenses appearing out of the blue.
