If you need cash now, then you may be tempted to take out a personal loan or a title loan. You should know what the differences are between the two and then you can decide which one to get. Here is how they differ.
1. Personal Loans- There are different types of personal loans, but the two main ones include payday loans and traditional loans you get from a bank. Personal loans usually require you to have good credit, but if you apply for a payday loan, then credit is rarely an issue. However, personal loans tend to come along with very high interest rates, and even the most competitive lenders have loans with high interest rates.
The amount you can borrow depends on various factors, such as your credit score (if applying for a traditional loan from a bank) and whether you are a new or returning customer. If you apply for a payday loan or a loan with a bank, then don’t expect to get that much if you are a brand new customer. Also, if you default on your loan, then it could end up in collections, which means you may be faced with debt collectors.
2. Car Title Loans- Title loans different from personal loans because you can receive a loan with no credit, but you do have to own a vehicle. If you own your car and have your car’s title, then the chances are you’ll be approved for the loan. However, if you decide to accept the terms and conditions of the loan, then the lender will keep hold of your title, and if you default on the loan, then the lender can legally take ownership of your car.
As for how much you can borrow, this depends on the type of car you own. Not only that, but you will need to meet minimum income requirements because the lender wants to make sure you make enough money to pay the loan back. If you meet minimum income requirements and you own a car, then you may be able to apply and get approved for quite a bit of money.
3. Which One Is Better- If you need a large sum of cash fast, then the car title loan option is probably your best bet. If you only need a small amount of money and you don’t mind very high interest rates, then consider applying for a personal loan or payday loan. The choice is up to you, but both personal loans and car title loans have pros and cons and the option right for you depends on your current situation. Whatever loan you decide to get, make sure you pay it back in time.
That is the difference between personal loans and car title loans. As previously mentioned, there are pros and cons to both types of loans and they both can come in handy. All you have to do is decide which loan is right for you. If you have any questions, you can always contact us today! We would be happy to answer any questions you may have.