How To Know If A Car Title Loan Is Best For You

There are a number of different types of loans available. Which loan will work best for you? The answer will depend largely upon your financial situation and your credit history. If you have a poor credit history and credit score, your choices are limited. Two loans that can help you access cash in the case of emergency are payday loans and car title loans.

Paydays Loans

These loans are unsecured, meaning there is no collateral. Basically, a borrower signs a contract to repay the loan. How much a person can borrow is dependent upon how much the person earns in a month. As long as the borrower has not defaulted on a payday loan in the past, getting approved is easy. Borrowers must understand that the normal terms of a payday loan require it to be paid off in roughly two weeks. The payoff is based around the borrower’s pay cycle. Borrowers visiting a storefront lender can expect approval and receive their money the same day. Online payday lenders will typically deposit funds into a borrower’s bank account the next business day.

Car Title Loans

A car title loan is different from a payday loan because it is a form of secured loan. A vehicle, actually the vehicle’s title, secures the loan. If a borrower fails to repay the loan, the lender, as a lien holder listed on the title, has the right to secure possession of the vehicle. An individual who owns a car, preferably all paid for, can use it to borrow. Title loan companies like Embassy Loans of Florida typically approve title loans very quickly. At Embassy Loans, prospective borrowers fill out an application, present a few forms of documentation including the title, and the loan can be approved usually within an hour. There are no credit checks since the loan is not based on a person’s credit history. The loan is still risky, but the lender can repossess the car or truck and then sell it to recover its losses if the borrower does not repay the loan. In most cases, a title loan company will only allow a person to borrow 30 to 50 percent of the vehicle’s actual value. Should the borrower default, this makes it much easier to make up any losses.

Which Loan Is Best

In choosing between the two types of loans, a smaller loan amount of less than $1,000 is typical for a payday loan. Car title loans usually range between $1,000 and $5,000. You must own a car or truck in order to apply for a car title loan just like you must have a job in order to be approved for a payday loan.