Title Loans Vs. Payday Loans: What Are The Differences?
If you’ve never used private lender services before and have only just started learning about short-term fast loans, then title loans and payday loans are likely the two you’ve encountered mentioned the most.
And as a newbie, it can be a little difficult to determine which one would suit your situation better. In this article, we’ll do a short and succinct breakdown of the differences between the two types of loans are, as well as which situations they suit the best.
What You Should Know About Title Loans And Payday Loans
What Are Title Loans?
Title loans are a type of secured short-term fast loans which require the potential borrower to provide their property as collateral to secure the lender’s assets. In this specific case, a car title proves the borrower's complete ownership of the car.
To qualify for a title loan, you’ll need to be of legal age, provide your car for inspection (its price and state will determine the maximum loan amount you qualify for), and – most importantly – the car’s lien-free title in your name. If the title has any outstanding liens placed against it or it's not in the borrower’s name, it cannot act as collateral.
Idaho Title Loans, Inc. will accommodate any credit type (good, bad, nonexistent) and income situations, as long as the items you provide manage to prove your eligibility.
What Are Payday Loans?
Payday loans are a type of unsecured short-term fast loans. Unlike title loans, you won’t need to provide any collateral to qualify. You will, however, need to provide proof of income (to show your ability to repay the loan down the line) and a blank check from an active checking account in your name, along with the identifying document proving your legal age. As with title loans, all credit types are welcome, and your income situation will be accommodated accordingly.
The Main Differences Between Title Loans And Payday Loans
Both loan types are pretty accessible, both are available to people with bad or nonexistent credit, and both require only a handful of items to qualify for. What are the differences?
1. The Maximum Cash Amount
As a secured type of loan, a title loan can provide a much larger sum than a payday loan. The max amount for the former at Idaho Title Loans, Inc. is up to $15,000, while the latter can only get you up to $500.
Title loans are a better fit for large, often long-lasting or recurring, emergencies. Payday loans, on the other hand, are designed as more of a helping hand to hold you over until your next payday.
2. Repayment Period
While both loans are short-term, it’s perfectly understandable to everyone involved that few are likely to be able to pay off $15,000 outright.
Title loans are usually paid over several installments over a set period (this is determined on a case-by-case basis, so check in with your agreement). Payday loans, on the other hand, are usually paid off all at once on your next payday (though this, as well, may be subject to adjustments).
3. An Active Checking Account
You can qualify for a title loan even without an active checking account in your name. You cannot qualify for a payday loan unless you have one.
4. Proof Of Income
As title loans are secured with collateral, the lenders get more flexibility with qualifying requirements. While Idaho Title Loans, Inc. will accommodate all income situations with both types of loans, you will need to provide proof of income if you’re applying for a payday loan. You aren’t likely to need proof of income with a title loan since the collateral you provide protects the lender’s assets outright.
How To Get A Title Loan Vs A Payday Loan
- Choose the suitable form on the website, fill it out and submit it;
- Answer when the loan representative gives you a call with further instructions;
- Gather the required items as per their instructions:
- The ID/driver’s license, your car, and its lien-free title in your name for a title loan;
- The ID/driver’s license, your most recent pay stub, and a blank check from an active checking account for a payday loan;
Get Started Today!
Our application process has been streamlined in a way to accommodates our clients’ busy work schedules. Whether it's Idaho payday loans or title loans you’re applying for, the procedure isn’t likely to take you more than an hour. Even with title loans that tend to last a little longer due to required car inspection, it can often take as little as just 30 minutes. Start by filling out a short inquiry form on our website!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.