Because vehicle title loans often have exceptionally high-interest rates, a personal loan is likely to be a lot less expensive alternative for borrowing money than a payday loan.
You might be eligible to receive a vehicle title loan if you need money and own a car. While an auto title loan might give you instant cash, it also has a number of disadvantages.
A car title loan is a secured, short-term loan that doesn’t usually require a credit check. Some lenders don’t even ask for proof of income.
To obtain a title loan, you must first give the lender the title to your car as collateral.
In exchange, the lender will provide you with a small loan that you must repay the loan within a short period, usually within 30 days.
While car title loans can provide you with quick cash, they also have disadvantages. Here are a few to remember:
APRs on car title loans can reach 300 percent or higher, which is much higher than what you’d pay on other types of credit.
Payday loans are typically required to be repaid quickly, usually within 30 days. Most lenders will let you roll your debt over into a new payday loan if you can’t pay back the installment loan on time.
Rolling over the loan, on the other hand, implies paying additional fees and interest on top of the original loan amount, putting you in even more debt. The cycle of debt.
A car title loan is secured by your vehicle. If you fall behind on your payments, your lender may take and sell your car, causing you to lose access to your primary means of transportation.
If you need money right away, a personal loan may be a better option than a car title loan.
Unlike car title loans, most personal loans are unsecured, so you won’t lose your car if you default. In addition, personal loans typically have lower interest rates and fees than car title loans.
Plus, depending on the lender, you may have up to seven years to repay a personal loan, making your monthly payments more manageable.
In addition to car title loans, there are various other options. Here are a few possibilities to think about:
These loans have APRs ranging from 300 percent to 500 percent and have concise repayment terms.
A utility or credit card company, for example, might be willing to extend your due date, reduce your payments temporarily, or put you on a payment plan. It’s not a bad idea to inquire about your options.
If you decide to take out a loan, sit down with your family or friends. Devise a repayment plan and agreement that spells out the loan terms. Keep the loan term in mind so that your relationships aren’t strained in the future.
If you decide to take out a personal loan, shop around for as many lenders as possible to find the best deal.
PaydayNow makes it simple. You may compare prequalified rates from several lenders in two minutes.
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