If you have a financial emergency, payday loans and title loans are two popular options for quick cash. But there are some things you should consider before securing a payday loan or title loan.
What is a payday loan?
A payday loan is an option for borrowing cash with the promise to repay the loan from your next paycheque. In British Columbia, you must repay a payday loan in 62 days.
Here are some advantages of a payday loan:
- You do not need to have a good credit score to apply for a loan.
- The application process is simple, often requiring a pay stub, a bill in your name and banking information.
- There’s no collateral, only a contract.
- A payday loan is typically made available to you within 24 hours or the next business day.
Here are some disadvantages of a payday loan:
- With a payday loan, you can only borrow up to $1,500.
- High-interest rates can make it difficult to repay a payday loan without a plan.
- If you do not repay your loan, the lender may choose to sue you for the amount borrowed with interest. This can damage your credit score.
What is a title loan?
A title loan is a secured loan that allows a borrower to use their car title as collateral to secure funding, given that the vehicle is paid off in full. While a payday loan is due in 62 days, title loans can extend for much longer, with some lenders offering up to three years.
Here are some advantages of a title loan:
- A title loan does not rely on the borrower’s credit history.
- You can access more cash with a car title loan than you can with a payday loan. The amount you can borrow depends on the car’s resale value.
- You will be able to get the money you need within a day or two.
- You get to keep your vehicle while you make payments.
Here are some disadvantages of a title loan:
- Due to the short-term nature of title loans, they can carry high-interest rates. But some lenders offer rates that are more attractive than others.
- Your vehicle can be seized if you fail to make your loan payments.
- The maximum amount of cash you are able to borrow is limited by the value of your car. Usually, you can only borrow up to 50% of the car’s value.
Do you need a title loan?
If you’ve decided that a title loan best suits your needs, contact us at Instant Auto Loans.
We are a specialty lending institution that has offered title loans for over 30 years. Our rates are among the lowest in the short-term lending industry, and you can get approved for a loan in 15 minutes.