Car Title Loan vs. Payday Loan

If you have seen car title loans advertised you may find yourself wondering whether it would be better to take advantage of a car title loan or a payday loan when you are facing a financial emergency. There are advantages to both types of loans, but it is important to understand which type of loan will provide you with the most benefits so that you can choose which one will be best for your situation.

First, you need to understand a little bit more about each type of loan. Let's look at a car title loan first and what is involved in that type of loan. With this type of loan you are able to borrow the money that you need in exchange for presenting your car title. When you pay back the money that you owe from the loan then you receive your car title back.

Now, let's look at a payday loan. A payday loan is somewhat different from a car title loan. With a payday loan you do not have to present the title to your car in order to be able to borrow the money that you need. In fact, you do not have to present any collateral at all in order to take out a payday loan.

Which type of loan is best for your situation? A car title loan or a payday loan? With a car title loan there is one thing that you absolutely must understand. In order to be able to take advantage of a car title loan you must have a car title. That means that you must own a car and you must have the title to it. Not everyone is in that type of situation. You may not have a car at all. If you do have a car, you may not own it outright and have the title to it. If that is the case, you would not be able to take advantage of a car title loan.

Also, you must consider the consequences of what will happen if you are not able to pay back the loan on time. While certainly everyone intends to pay back the loan they take out, in reality life sometimes intervenes and events occur and expenses come up that may prevent you from making that payment on time. When that happens and you have taken out a car title loan then you will not be able to get back the title to your car. This can certainly lead to many difficulties, particularly if you rely on that car to get to and from work.

This is not the case with a payday loan. When you choose a payday loan you do not have to present the title to your car in order to receive the funding that you need to cover emergencies or anything else that you may need extra money for in a hurry. You do not have to put up any collateral at all with a payday loan, as with a car title loan. Instead, the payday loan company will simply want to verify that you have a steady source of income. Provided that you do have a source of income that is considered to be regular, then you can usually be approved for a payday loan. If you do not have a vehicle or you simply do not want to run the risk of putting up the title to your vehicle, then a payday loan can be a good alternative to a car title loan.

In the event that you are not able to pay back the payday loan on time you may certainly incur additional interest, but you will not have to worry about losing your vehicle or any other type of collateral. While the importance of paying back your loan on time should certainly be kept in mind, it is a relief to know that you do not have to concern yourself with losing your car title as you would with a car title loan.

While economic times may be uncertain and you may face unexpected expenses from time to time a payday loan can provide you with the reassurance that funding is available to cover those unexpected expenses safely and securely. The entire transaction can be handled online, which is not the case with a car title loan, due to the fact that you must hand over your car title. When all of the many different elements are taken into consideration it would certainly seem that a payday loan offers far more advantages over the car title loan, including no collateral required and an easy online transaction. When you find yourself facing unexpected expenses, keep in mind the many benefits offered by a payday loan over a car title loan.