payday loans and car title lending compared

There are quite a few ways to borrow money should you find yourself in a tight financial spot. Consumers who have a temporary need for cash may take out a bank or credit union loan, borrow from a credit card, or take out a payday loan to address their needs, but auto title loans are growing in popularity among loan companies.

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There are safe ways to borrow money and bad ways to borrow money. Car title loans are similar to quick cash loans in price, but come with additional risk. A credit card loan will work, but such borrowing comes with a higher rate. If you are destitute or have insufficient credit, you may be stuck with payday loans or cash advance loans or car title loans. Of course the ideal and most affordable way to borrow money is to take out a loan from a bank or credit union. If you are well off, you can almost certainly borrow from credit unions or bank card accounts. The priciest type of unsecured loan would be a quick cash loan, but rates of interest can rapidly run into the three hundred to one thousand percent range for a short term loan.

Cash advance loans or quick cash loans are unsecured -A payday loan is a temporary loan of two weeks' length. Cash advance loans are paid with a postdated check for the loan amount plus the fee. A payday loan is renewable; it may be renewed, or rolled over, for another two weeks if the person pays the fee once more. For a quick cash loan, the borrower takes out a small loan in the amount of one hundred to five hundred dollars and pays a charge that ranges from $15-30 for every $100 borrowed. Quick cash loans are not secured by collateral, which businesses say justifies the high price. Payday loans are remarkably expensive; interest rates for a $15/$100 fee run 391% annually.
 

Title loans are risky -Title loans have a tendency to run somewhat longer than cash advance loans; 30 days is the most common duration. A car title loan works much like a payday advance, but the cash is secured by the title to the client's car or truck. If the vehicle title borrowing isn't repaid, the lender may take possession of the car and in several states, they may sell it to get their money back. In some states, including Georgia, the title lender may even keep the entire amount, no matter the amount.

The consumer not only has to cough up high interest rates, but he is also chancing the loss of their automobile if they do not pay on time, and that occurs fairly often. Despite the fact that title financing offer less risk to the business, they usually have rates of interest that are typically 300-400% per year. Given that car title lending is backed by collateral, one might think that they would be less expensive.

Borrowers who are pondering applying for title lending should take caution. Although both title lending and cash advance lending offer short-term cash to those who need it at high rates of interest, vehicle title financing comes with additional risk to the customer. It is one thing to borrow money at a steep interest rate that contrasts favorably to borrowing from the mob, but it is another thing again to take the risk of losing your transportation if you cannot pay.