Why You Should Choose Auto Title Loans Over Payday Loans
July 6, 2015
Instant auto title loans and payday loans are both options for those even with low credit scores. But there are some key differences between how the money is loaned, and how much. The difference could be enough to start improving your credit score and quality of life.
In order to get a loan, the first step is to show it can be paid back. With a bank, this tends to be done with credit score. People with a long history of paying back borrowed money will continue to borrow more and more. With those that don’t have the credit score as proof, equity can be used.
Equity in these cases is either a car or a pay check. In an auto title loan, the pink slip of a car is used as equity. The ownership of the vehicle is temporarily held by Cash Car Loans while you get a lump sum of money. The vehicle is still in your hands – you still get to drive it and use it as necessary. As soon as the cash advance is paid off, the pink slip is returned.
A payday loan uses a paycheck as the equity. In terms of value, a car is much more valuable than a weekly or monthly paycheck. This means the payday loan will have to match the value of a paycheck. The lump sum of cash from the loan will be much less.
The problem with a payday loan is that it is much less money, and must be paid off immediately. It is like trading one paycheck for another. This can lead to a cycle of spending and unhealthy borrowing. Also, if paychecks stop or aren’t consistent, then the payday loan will not be there for you.
Auto title loans do not take anything away. You are still free to drive your car and keep moving forward with life and business. The lump sum is also larger because the car is valuable. And the loan does not have to be paid back in full upon your next paycheck.
Since most restrictions are removed, auto title loans become a much more viable solution to quick cash.