Title loans vs. payday loans: How do they compare? | finder.com

Title loans vs. payday loans: How do they compare?

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Not sure whether to get an auto title loan or payday loan? We’ve got you covered.

When a financial crisis hits, it can be hard to determine what type of short-term loan you need to start picking up the pieces. Auto title loans and payday loans have a lot of similarities, but the differences make choosing one over the other difficult. You’ll need to compare a number of features to find the better option.

Max Cash Title Loans

Our top pick: Max Cash Title Loans

With a quick online application, Max Cash could help connect you with a lender, finding you options in minutes.

  • Max. Loan Amount: $50,000
  • Loan Term: Varies by lender
  • Turnaround Time: As little as 1 business day
  • No bank account requirement.
  • Not available in 12 states: CO, CT, DC, HI, MT, NE, NJ, NY, OR, SC, SD or WY.

    Title loans vs. payday loans: How do they differ?

    Both types of loan are fairly easy to qualify for and typically don’t require stringent credit checks. However, they’re known for being costly forms of credit. If you aren’t able to repay your loan by the due date, your lender will start assessing extra fees that can quickly drive up the cost of your loan no matter which you’ve opted for.

    • Title loans. When you take out a title loan, you borrow money by using the title to your car as collateral. This type of loan is usually due within 30 days, but some lenders offer installment periods of a few months.
    • Payday loans. A payday loan is a short-term loan you get by writing a postdated personal check in-store or giving your lender access to your bank account. The due date is usually set for the next time you’re paid.

    Below, we break down the costs to make it easier to compare.

    Browse your auto title and payday loan options

    Rates last updated June 21st, 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 Max. Loan Amount Turnaround Time Requirements
    Max Cash Title Loans
    With a quick online application, Max Cash could help connect you with a lender, finding you options in minutes.
    $50,000
    As little as 1 business day
    Must be a US citizen or permanent resident, 18 or older with a regular source of income. Not available in the following states: CO, CT, DC, HI, MT, NE, NJ, NY, OR, SC, SD or WY.
    LoanMart Car Title Loans
    A LoanMart auto title loan allows you to borrow money against your car, even if you have bad credit.
    $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.
    Finova Financial Auto Equity Loans
    Short-term loans secured by your car title. Repayments accepted through MoneyGram if you don't have a bank account.
    $5,000
    as little as one business day
    Must live in AZ, CA, FL, NM, SC, TN or OR. Must own your car outright, have a valid car insurance policy and be a US citizen or permanent resident.
    TitleMax Auto Title Loans
    Auto title loans on cars and motorcycles to people in 16 states across the US.
    $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.

    Compare up to 4 providers

    Rates last updated June 21st, 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 Max. Loan Amount Turnaround Time Requirements
    Check into Cash Payday Loan
    With 1,000 branches in 30 states, get $50 to $1,000 in days from this direct lender.
    $1,000
    1–2 business days
    You must be at least 21 and an American citizen and have a bank account, email address and phone number.
    LendUp Payday Loans
    LendUp offers $250 loans for first-time borrowers. Good credit is not required. Visit the site to see if available in your state.
    $250
    generally receive the money the next business day
    Be 18+ years of age and have a checking account that can accept electronic transfers.
    CashNetUSA Loan
    Apply for a short-term loan with an easy online application and dedicated customer service.
    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.
    ACE Cash Express Payday Loans
    Quick payday, installment and title loans with no prepayment penalty and a 72-hour satisfaction guarantee. Funds can be loaded on an ACE Elite™ Visa® Prepaid Debit Card.
    Varies by state
    Generally receive the money the next business day
    Must be 18+ years old, have a steady source of income and a checking or savings account. Must not be a debtor in bankruptcy.
    LoanByPhone Payday and Installment Loans
    This mobile lender offers convenient cash loans. Apply online or by phone.
    $3,000
    1–2 business days
    Must be 21 years old and have a Social Security number, a regular source of income, a valid email address, an active checking account and a phone number.
    BadCreditLoans.com
    With straightforward, simple qualifications, these loans offer easy approval for people with poor credit.
    $5,000
    Varies
    Depending on lender requirements, people from all 50 states may not be eligible for a personal loan.

    Compare up to 4 providers

    Title loans vs. payday loans: How much can you borrow?

    Title loanPayday loan
    25% to 50% of your car’s valueTypically $100 to $1,000

    On average, you can borrow between $100 to $5,500 through a title loan. The exact amount you’ll receive depends on the appraised value of your car. Most lenders will give you 25% to 50% of the car’s value.

    With a payday loan, you can usually borrow between $100 and $1,000. Many states have borrowing limits that protect consumers, so check your state’s laws on payday loans.

    You may be able to borrow more with a title loan, but it comes with the risk of losing your car if you default. Since payday loans don’t require collateral, you won’t lose any personal property if you fail to repay.

    What does it mean to default on a loan?

    If you’re unable to repay your loan, a lender may put your loan into default and begin the collections process. For secured loans, this means the property you used as collateral can be repossessed. For unsecured loans, your credit will suffer and lenders may take legal actions against you to recoup lost money.

    Title loans vs. payday loans: What are the repayment terms?

    Title loanPayday loan
    Typically due in 30 daysTypically due by your next payday

    Both title and payday loans need to be repaid within a short period of time. 30 days is the normal term for a title loan. Payday lenders require you to repay your loan when you get your next paycheck. The average term is about two weeks.

    Since you’ll need to repay these loans quickly, it’s best to use them only if you’re sure you’ll have enough money to repay them by the due date. Otherwise, you risk default and excess fees that can increase the cost of your loan exponentially.

    Title loans vs. payday loans: What are the interest rates?

    Title loanPayday loan
    Typically 300% APR and upTypically 400% APR and up

    There’s no escaping the fact that both title and payday loans are expensive. A title loan will likely cost you at least 25% a month in interest — that translates to an average APR of 300%.

    With a payday loan, you’ll usually be charged $15 to $30 for every $100 you borrow. This finance charge serves as the interest you’ll pay on your loan. Since the window of a payday loan is around two weeks, the APR works out to about 400% or more. For example, if you take out a payday loan for $500, you might pay $150 in interest — nearly a third of your loan.

    Both title and payday loans come with high interest rates. This is why it’s crucial to shop around for a good deal and consider your alternatives before committing to any type of short-term loan.

    Title loans vs. payday loans: How much are the fees?

    Title loanPayday loan
    Varies by lender$15 to $30 per $100 borrowed

    Fees for title loans will vary based on the lender. These may include origination, processing and insurance fees. Before agreeing to anything, be sure that you understand the loan terms and any fees you’ll need to pay. Some title loan lenders like to tack on fees for optional items such as roadside assistance, so go over your contract carefully to be sure you’re getting a fair deal.

    For a payday loan, you’ll usually pay $15 to $30 for every $100 you borrow. If you can’t pay off your loan when it’s due, you may need to roll the amount you borrowed into a new loan. At that point, you’ll likely pay additional fees. This can increase the amount you have to pay by hundreds of dollars.

    Fees for both loans can be high, although title loans tend to come with more aggressive fees. Check around to find a loan that has low fees, and always make sure your lender is obeying the laws of your state.

    Title loans vs. payday loans: What are the application requirements?

    Title loanPayday loan
    Government-issued ID
    Lien-free title
    Proof of insurance
    Government-issued ID
    Bank account details
    Regular source of income

    Title and payday loans are relatively easy to qualify for because lenders rarely run credit checks. For a title loan, you’ll need a government-issued ID, the title for your car and proof of car insurance. For a payday loan, you’ll need an ID, a bank account and a regular source of income.

    Which option should you pick?

    While title and payday loans can help you quickly get cash, they can be quite expensive, especially when lenders sneak in hidden fees and terms. Your choice depends on the amount of risk you’re willing to take on and how much money you need.

    A title loan can be better for people who need more money and are sure they can repay their loan by the due date. However, if you only need a small amount and don’t want to use your vehicle as collateral, a payday loan may be a better option. Since the costs are about equal, weigh your options carefully.

    You can also consider some payday loan alternatives if you’re not ready to take out a loan.

    Frequently asked questions

    Are payday loans available in my state?

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    US Payday Loans Offers

    Important Information*
    Slam Dunk Loans

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

    LendUp Payday Loans

    LendUp offers $250 loans for first-time borrowers. Good credit is not required. Visit the site to see if available in your state.

    Check into Cash Payday Loan

    With 1,000 branches in 30 states, get $50 to $1,000 in days from this direct lender.

    OppLoans Installment Loans

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

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