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

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


Editor's choice: OppLoans Installment Loans

  • Easy online application
  • Quick approval
  • Long repayment terms
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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.

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

Name Product Filter Values Loan amount Turnaround time Requirements
Max Cash Title Loans
Up to $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. Car Title Loans
$500 to $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.
LoanMart Car Title Loans
$2,500 to $50,000
1 business day
Resident of an eligible state, car title in your name, proof of income, valid state ID
A LoanMart auto title loan allows you to borrow money against your car, even if you have bad credit.
Finova Financial Auto Equity Loans
$750 to $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.

Compare up to 4 providers

Name Product Filter Values Loan amount Turnaround time Requirements
B9 pay advance app
Up to 100% of your salary
$500+ in monthly direct deposits into B9 account, checking account, ITIN or SSN, government-issued photo ID
Withdraw 100% of your paycheck with no extra fee for instant funding.
OppLoans Installment Loans
$500 to $5,000
1 business day
Direct deposit, meet minimum income requirements, live in eligible state
Comes with the option to change your due date so you won’t fall behind on repayments.
$1,000 to $25,000
2 to 3 business days
Be employed, have a US bank account, live in a state where Stilt operates, hold one of the following visas: F-1 and OPT, H-1B, H4, O-1, L-1, TN, J-1, DACA or be a US citizen.
Get a fair loan designed for immigrants and nonresidents.
CashNetUSA Loan
Varies by state
As fast as same business day
Regular source of income, bank account, US citizen or permanent resident, age of majority in your state
Sign up for its discount program to get access to coupons and deals on everything from dining out to tax services.
Fast5kLoans Short-term Loans Connection Service
$100 to $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.

Compare up to 4 providers

How much can I 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.

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.

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.

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.

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 I 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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One Response

    Default Gravatar
    JackHarryOctober 22, 2019

    Can You Have a Payday Loan and Title Loan at the same time period?

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