Installment loans vs. title loans: What’s the difference? | finder.com

Installment loans vs. title loans: What’s the difference?

If you’re in a cash crunch, installment loans and title loans are two options that may help.

OppLoans Installment Loans

OppLoans Installment Loans

Get fast funding up to $4,000 with reasonable interest rates.

  • Min. Loan Amount: $500
  • Loan Term: 9 to 36 months
  • Turnaround Time: 1 business day
  • No security deposit needed
  • Confidential and secure!

    Installment loans vs. title loans: How do these loans differ?

    • A title loan allows you to borrow money by designating your car as collateral. This type of loan is usually due within 30 days or a few months.
    • When you take out an installment loan, you borrow money that you pay back in monthly payments. This type of loan is usually extended for longer than a title loan — typically paid back within six months or a few years, depending on what the loan is for.

    Both types of loans are similar in many respects. For example, they can come with high APRs, making them extremely expensive, but they often don’t come with credit checks. For most borrowers, these loans are attractive because they offer quick cash.

    Let’s compare them to make your decision easier.

    Installment loans vs. title loans: How much can you borrow?

    Installment loanTitle loan
    Typically under $1,000, though it can be more depending on the lenderTypically $100 to $10,000, depending on the lender, what your car is worth and the state you live in

    Installment loans are typically given for small dollar amounts, usually under $1,000. However, depending on the lender they can be as large as thousands of dollars or even over $10,000.

    On average, title loans are for $100 to $5,500. But they can be for $10,000 or more from some lenders. However, the exact amount you’ll receive depends on the value of your car. Lenders will typically give you 25% to 50% of your car’s value.

    Bottom line

    Title loans can lead to bigger loan amounts, but with the risk of losing your car if you default.

    What does it mean to “default” on a loan?

    When a loan is at risk of default, it means that there’s a possibility the borrower will not be able to fulfill their obligation specified in the loan contract. For secured loans, like title loans, this means your car can be repossessed. For unsecured loans, like installment loans, your lender will likely sell your account to a collection agency or hire a debt collector to try to get the money you owe them.

    Here’s a selection of installment loans you can apply for

    Check to see if any of these lenders provide loans in your state.

    Rates last updated April 25th, 2018
    Unfortunately, none of the short term loan providers currently offer loans in your state. Learn more about short term loans in your state to find an alternative.
    Name Product Product Description Maximum Loan Amount Term of Loan Turnaround Time Requirements
    OppLoans Installment Loans
    Installment loans with competitive rates from a top-rated direct lender.
    $4,000
    9 to 36 months
    1 business day
    Open to residents of AL, AK, AZ, CA, DE, FL, GA, ID, IL, IN, KS, KY, MI, MN, MO, MS, NE, NV, NM, OH, OK, OR, SC, TN, TX, UT, VA, WI and WY. Must have direct deposit and meet minimum income requirements.
    CashUSA Installment Loans
    $10,000
    90 days to 72 months
    As early as 1 business day
    Monthly income of $1,000+ after taxes and valid checking account.
    Slam Dunk Loans
    Potentially get approved for a short-term loan through this lender-connection service, even with poor credit history.
    $2,500
    Varies by lender
    As soon as next business day
    Must be employed, receive regular income, earn at least $800 a month, have a checking account, be 18+ yrs old and a US citizen.
    BadCreditLoans.com
    With straightforward, simple qualifications, these loans offer easy approval for people with poor credit.
    $5,000
    3 to 36 months
    Varies
    Depending on lender requirements, people from all 50 states may not be eligible for a personal loan.
    Blue Trust Loans Installment Loans
    Get an installment loan from an online tribal lender. Perks for returning borrowers.
    $2,000
    6 months
    As soon as next business day
    Must be at least 18 years old and have a verifiable source of income with direct deposit into your checking account.
    CashNetUSA Loan
    Apply for a short-term loan with an easy online application and dedicated customer service.
    Varies by state
    Varies by state
    1 business day
    You must be a US citizen or permanent resident, be at least 18 years old and have regular income and a bank account.
    HonestLoans Installment Loans
    Get a flexible installment loan with fast funding through one easy online application form.
    $2,500
    Varies by lender
    As soon as one business day
    Must be employed and receive regular income, earn at least $800 a month, have a checking account and be an 18+ years old legal US citizen.
    MaxLend Installment Loans
    Get up to $1,000 as a first-timer, with loans of up to $2,000 and lower APRs for repeat borrowers.
    $2,000
    6 months
    As soon as the next business day
    Must be at least 18 years old and a US citizen, have a valid bank account and provide a verifiable source of income.

    Compare up to 4 providers

    Installment loans vs. title loans: What are the repayment terms?

    Installment loanTitle loan
    Typically paid back in six months to a few yearsTypically due in 30 days

    With installment loans, you pay a set amount monthly until you fully repay your loan. If you take out a title loan, it’s typically due in 30 days, although depending on the lender, you may be able to pay it back over a few months.

    Bottom line

    Title loans are typically extended for a very short amount of time. You’ll typically have more time to repay an installment loan.

    Installment loans vs. title loans: What are the interest rates?

    Installment loanTitle loan
    Typical APRs range from 25% to 100%300% APR and up

    Both installment and title loans can be very expensive — a three-digit APR isn’t unheard of. Be wary when applying for either, and make sure you can repay your loan on time. Many borrowers find themselves trapped in debt because they have to keep taking out new loans just to pay off old ones.

    Bottom line

    Both installment and title loans come with high interest rates.

    Trapped in a debt cycle? Here are ways to dig yourself out

    Installment loans vs. title loans: How much are the fees?

    Installment loanTitle loan
    Varies based on lenderVaries based on lender

    You’ll probably pay a fee as soon as you take out an installment or title loan. These may include origination, processing and insurance fees.

    What is an origination fee?

    An origination fee is a fee charged by a lender for taking out a loan.

    Whichever loan you pick, fees can add up to a substantial percentage of the loan. For example, if you take out a $500 title loan, you could pay $125 in fees alone.

    Bottom line

    Understand how much you’ll pay in fees — not just in interest — before taking out either type of loan. You may be surprised at how much they add up.

    Beware of predatory lenders

    Both title loans and installment loans are known to be readily available to customers with bad credit. You need to be wary of this, because these loans tend to come with extremely high interest rates and have fees that can land you into a debt trap. Here are some things to look out for:

    • Guaranteed approval. While you might think this is a great perk, it’s not. Lenders that offer guaranteed approval aren’t looking out for your best interests and don’t care whether you’ll be able to repay the loan or not.
    • Pressure to borrow more than you need. You should only take out a loan for the amount you need to get through whatever financial hardship you’re having. Lenders who push you to take out more money aren’t looking out for your interests.
    • Loan renewal options. You may think that being able to “rollover” your loan if you can’t pay it back is a good thing, but this is an easy way for you to land in a debt cycle, where you’re constantly renewing your loan or taking out more loans to pay for the first one.
    • Upfront fees or payments. Be cautious of any lenders asking you to pay application or origination fees before your loan is disbursed. This could be a scam.
    • The lender approached you. If you’re getting flooded with texts and robo-calls asking you if you want to take out a loan — run. These could be a scam. Legitimate lenders will at most send you a letter or two in the mail. Anything more persistent should raise a red flag.

    Installment loans vs. title loans: What are the requirements?

    Installment loanTitle loan
    Government-issued ID, source of incomeGovernment-issued ID, title for car and proof of insurance

    When you take out an installment loan, you’ll need to present valid ID and a source of income. Most reputable lenders will check your credit. If your lender offers no-credit-check installment loans, be cautious: They tend to come with higher interest and fees that could land you in a debt cycle. Instead, you may want to consider another type of loan.

    Find out the drawbacks of no-credit-check installment loans

    With a title loan, a lender will rarely check your credit. Further, you usually don’t have to provide much proof that you can repay the loan. The most important requirements are the title for your car, valid ID and proof of insurance. Before handing over your title, remember that you could lose your car if you’re unable to repay your loan.

    Bottom line

    A lender will typically check your credit before extending an installment loan. It’s easier to get a title loan, because there’s no credit check.

    Bottom line: Which option should you pick?

    Both installment and title loans can get you cash in a pinch, but they can be filled with financial risk.

    The title loan industry has a particularly poor reputation, because it often targets individuals who don’t have the ability to repay. Furthermore, a title loan requires that you put up your car as collateral — and you’ll lose it if you don’t repay the loan. This may put pressure on you that you might not have with a personal loan, for example.

    Installment loans can be a mixed bag. Reputable lenders are out there, but in recent years installment loans have been widely extended without credit checks. As a result, they’ve trapped many borrowers in long-term debt — and that’s why they’re often associated with payday and title loans.

    One of the biggest problems with title and installment loans is they can be extremely expensive. That often leads to miscalculating your ability to repay and potentially getting into deeper financial trouble. If you’re in a cash emergency, one idea is to consider alternatives before settling on a title or installment loan.

    Frequently asked questions

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    US Payday Loans Offers

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    Slam Dunk Loans

    Potentially get approved for a short-term loan through this lender-connection service, even with poor credit history.

    LendUp Payday Loans

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    Check into Cash Payday Loan

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    OppLoans Installment Loans

    Installment loans with competitive rates from a top-rated direct lender.

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