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

When — and if — you can benefit from one of these short-term loans.

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When you’re struggling to keep your head above water, a short-term loan may seem like the best option, but that doesn’t make the choice easy. Title loans and installment loans offer different benefits and have unique downsides. Calculate the cost, the risk and compare your options to find the best solution to your budget problems.

Our top pick: OppLoans Installment Loans

  • Min. Loan Amount: $500
  • Max. Loan Amount: $5,000
  • Turnaround Time: 1 business day
  • Loan Term: 9 to 36 months
  • Requirements: Direct deposit, meet minimum income requirements
  • Easy online application
  • Quick approval
  • Fast funding
  • Long repayment terms

Our top pick: OppLoans Installment Loans

Comes with the option to change your due date so you won’t fall behind on repayments.

  • Min. Loan Amount: $500
  • Max. Loan Amount: $5,000
  • Turnaround Time: 1 business day
  • Loan Term: 9 to 36 months
  • Requirements: Direct deposit, meet minimum income requirements
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What’s the difference between auto title loans and installment loans?

  • Installment loans are paid back in monthly increments. Although still a short-term loan, terms usually last longer than an auto title loan, ranging from a few months to a few years depending on the purpose of the loan.
  • Auto title loans use the title of your vehicle as collateral. Payments are usually due within 30 days or a few months, depending on your lender and the amount you borrow.

However, both types of loan are similar in many respects. They can be quite costly due to the short turnaround period and high APR, and many lenders won’t perform credit checks. If you need a quick injection of cash into your budget, they can be useful tools. But stay cautious. Many borrowers fail to repay by the due date and are forced to roll over their loan amount — making them even more expensive.

Compare auto title and installment loans

Updated October 16th, 2019
Name Product Filter Values Max. Loan Amount Turnaround time Requirements
$1,200
As soon as the next business day
Regular source of income received biweekly or semi-monthly, Missouri or Utah resident, checking account with automatic deposits, not a military service member
Borrow up to $1,200 — but only if you live in Missouri or Utah.
$35,000
As soon as the next business day
Regular source of income, verifiable bank account, US citizen, ages 18+
Get connected with multiple lenders you might qualify with — even if you have bad credit.
$5,000
1 business day
Direct deposit, meet minimum income requirements
Comes with the option to change your due date so you won’t fall behind on repayments.
$2,600
1 to 2 business days
Active checking account, regular source of income, email address
Get access to tools to help you plan a career move, make some extra cash or search for a better-paying job.
$50,000
Same business day to 1 business days
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.
Get a flexible installment loan with fast funding through one easy online application form.
$15,000
Same business day to 1 business days
$1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
Get offers from potential lenders in minutes by filling out just one online form.
$10,000
As early as 1 business day
$1,000+ monthly income after taxes, valid checking account
Explore its online education center to get tips on budgeting, how to prioritize your bills and more.
Varies by state
1 business day
Regular source of income, bank account, US citizen or permanent resident, ages 18+
Sign up for its discount program to get access to coupons and deals on everything from dining out to tax services.

Compare up to 4 providers

Updated October 16th, 2019
Name Product Filter Values Max. Loan Amount Turnaround time Requirements
$50,000
Same business day to 1 business days
Must be a US citizen or permanent resident, 18 or older with a regular source of income.
With a quick online application, Max Cash could help connect you with a lender, finding you options in minutes.
$10,000
Varies by lender
Have a regular source of income, not be involved in any bankruptcy proceedings, be a US citizen or permanent residence, be at least 18 years old (varies by state).
Quickly find a lender and potentially borrow up to $10,000 by using this auto title loan connection service.
$50,000
1 business day
Must live in AL, AZ, IL, MO, NM, SC or UT. Must have verifiable income, car value of at least $1,500 and a vehicle that is paid-off or close to being paid-off.
A LoanMart auto title loan allows you to borrow money against your car, even if you have bad credit.
$5,000
as little as one business day
Must live in AZ, CA, FL, NM, SC or TN. Must own your car outright, have a valid car insurance policy and be a US citizen or permanent resident.
Short-term loans secured by your car title. Repayments accepted through MoneyGram if you don't have a bank account.
$10,000
as little as 30 minutes
Must have a lien-free vehicle title, government-issued ID, and be age of majority in your state.
Auto title loans on cars and motorcycles to people in 16 states across the US.

Compare up to 4 providers

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

Installment loanTitle loan
Typically between $1,000 and $5,000Typically 25% to 50% of your car’s value

Installment loans can go for than $500 or up to $10,000, but you’ll generally find one somewhere in the $1,000 to $5,000 range.

Title loans are a bit different. Because your loan amount is based on the appraised value of your vehicle, what you can borrow will vary by your lender and your state. On average, you can typically borrow from $100 to $5,000.

Installment and title loans often come in similar amounts, but you risk losing your car if you default.

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

Installment loanTitle loan
Three months to three yearsUp to 30 days

Installment loan terms typically range from three months to three years, though the exact term you get will be based on your lender and your state of residence. This gives you multiple months to repay the loan, but a longer term also means you’ll pay more in interest.

Car title loans, on the other hand, are extremely short-term. Many lenders set the due date at 30 days, though some lenders will allow a few months to fully repay. This, too, can get costly since your lender may charge you rollover fees for extending your loan.

You’ll have more time to pay back an installment loan, but it could end up costing you more money than a title loan with a quick turnaround time.

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

Installment loanTitle loan
25% to 100% APR300% APR and up

Both installment and car title loans can be very expensive. A three-digit APR isn’t unheard of with either option, though installment loans can sometimes be slightly less costly. Be wary when applying for either, and make sure you can repay your loan on time.

You should also search for a lender that doesn’t have a prepayment penalty. This means you can pay your loan off early without being charged a fee. Less time on your loan term equals less spent on interest, which can reduce the overall cost of your loan.

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

Installment loanTitle loan
Varies by lenderVaries by lender

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

Understand how much you’ll pay in fees before taking out either type of loan. You may be surprised at how much you’ll be paying your lender just to borrow money.

Beware of predatory lenders

Both auto title loans and installment loans are marketed to customers with bad credit. These loans tend to come with extremely high interest rates and have fees that can land you into a debt trap. While this is commonplace, a predatory lender has a few more tricks that can deceive you. Here are some things to look out for:
  • Guaranteed approval. There’s no such thing as guaranteed approval. Lenders who advertise this are often trying to make a quick buck off interest and don’t care about your ability to repay.
  • 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. Don’t borrow from a lender that requires you to pay an upfront fee. This is often a scam. Application and origination fees are usually deducted from your loan funds before being given to you, not requested before you receive your loan.
  • 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.
  • Nontraditional payments. Lenders either require you to leave a postdated check or allow an ACH transfer from your bank account. If a lender is asking you to pay in gift cards, cash or another untraceable method, you might be dealing with a scam.

What you should know about predatory lenders

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

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

When you take out an installment loan, you’ll need to present a valid ID and a source of income. Most reputable lenders will check your credit, though likely not through one of the big three credit bureaus. While you can get an installment loan from a lender that doesn’t check your credit, this will likely be a much more expensive option.

With a car title loan, a lender will rarely check your credit, and you usually don’t have to provide much proof that you can repay the loan. The most important requirements are a lien-free title for your car, a valid ID and proof of insurance.

Which option should I pick?

Both installment and auto title loans can get you cash in a pinch, but they can be risky.

The title loan industry has a particularly poor reputation because it often targets individuals who don’t have the ability to repay and because a title loan requires that you use your car as collateral. If you don’t repay the loan, you may have your car repossessed.

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, which is why they’re often associated with payday and car title loans.

Alternatives to installment loans and title loans

Not sure if either is right for you? Consider these alternatives.

  • Payday alternative loans (PALs). Some federal credit unions offer PALs as an affordable short-term loan option. Here, rates are capped at 28%, you can borrow up to $1,000 and terms range from one to six months. But they not every credit union offers them, so they can be hard to find.
  • State assistance. Depending on where you live and your income, you might be eligible for financial assistance from your local government. Check out our article on payday loan alternatives for more details.
  • Friends and family. If you’re in a financial pinch and can’t qualify for a loan from a lender, your social circle might be willing to help out.
  • Payday loans. This short-term loan has the fast turnaround time of a title loan but doesn’t require collateral. Like installment and car title loans, these are extremely expensive and should treated as a last resort. You also can’t typically borrow more than $500, depending on your state.

Bottom line

Both auto title and installment loans can be extremely expensive and come with a fast turnaround time. And with a title loan, you could end up losing your car. But if you need money fast and don’t have other options they could help cover an emergency expense. To learn more about how short-term loans work, check out our guide.

Frequently asked questions

There may be better personal finance options for you

Short-term loans can be good in an emergency, but they may not fit your needs. You may qualify for a personal loan to help you through a rough financial situation.

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