Title Loan vs. Payday Loan: Which Should You Choose?

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.

Give us a call if you have questions or apply online today. Let us help you get the money you need.