If you had to decide between title loans for cars and conventional payday loans, which one would you go for? To the common observer, they may seem alike at first glance. This is because both of them are short-term by nature, are available instantly and give immediate cash to those who are unable to afford the luxury of a traditional loan. Both the loans are fine if you are able to repay them within the stipulated duration and both incorporate the advantage of quick payment options without penalty.
However, there is a thin line between the two which makes both loans drastically different. You need to comprehend this before treading on the line so that you can take the right decision and choose the loan which is more feasible for you. While online car title loans’ lenders keep the title-papers of your car with them as collateral, payday loans make use of electronic funds transfer or post-dated checks as security in which the latter can cost you more.
Moreover, there is flexibility when it comes to the repayment terms of auto title loans. The first payment can be made after two weeks of receiving the loan up till the 30 day period when the loan expires. However, you can even adjust the terms of the contract with your lender to make it long-term.
Also with car title loans, you keep the car and have access to it throughout the time you have borrowed the money. And you can effortlessly qualify for these loans if you are the owner of a car or any other vehicle, which is an easy requirement to meet as everyone owns a car nowadays.
A major disadvantage of traditional payday loans is that if you default, the loan amount swells considerably and the fee increases to an extortionate sum which can be very difficult to repay, and you might just go bankrupt! This is because with payday loans, there is a propensity to become careless when it comes to payments since you have nothing substantially tangible to lose. Therefore, you are ultimately hit with legal and collective action.
Thus, both loans may seem very similar on the surface but are radically different when you probe deeper and weigh their pros and cons. Payday loans can be more risky and hence, your best alternative to payday loans is auto title loans which you can obtain conveniently and without any trouble.