Title loans and payday loans are both efficient borrowing methods that offer quick funding. They both provide money that can help those in need of extra cash when facing emergency financial needs. However, these two are different in terms of eligibility criteria, loan terms, and borrowing amounts.
If you are thinking about taking a “title pawn near me” but wondering how different a title loan is from a payday loan, here is everything you need to know.
What Is a Payday Loan?
A payday loan is an unsecured loan that is typically small in size and has exceptionally high-interest rates. It is designed to be used as a last resort to cover unexpected expenses or bridge a temporary gap in cash flow. Payday loans are usually due on your next payday, and the loan amount is usually based on your income.
Therefore, you must provide the lender with proof of employment and a bank account to get this loan. You will also be required to provide your identification information and agree to the lender’s terms and conditions.
How Does a Payday Loan Work?
During application, you’ll be required to provide the lender with a postdated check or an ACH authorization for the amount of the loan, plus any fees and interest that are due. When the loan is due, the lender will either cash the postdated check or withdraw the funds from your bank account.
You should only take out a payday loan if you can afford to repay it on time. Because if you are unable to repay the loan on time, you may end up with a significant amount of debt.
What Is a Title Pawn?
A title pawn is a secured loan that allows a borrower to get cash on their vehicle. The borrower gets the amount of money they are asking for in exchange for the title of their vehicle. To obtain a title pawn, you must give the lender a clear title and a set of keys to the vehicle.
The loan amount is based on the value of the vehicle, and you are allowed to keep and drive the vehicle while repaying the loan. Unlike payday loans, title pawn does not require the borrower to have a good credit score or a job.
How Does a Title Pawn Work?
A title pawn is an excellent financing option, especially if you are unable to secure a loan from the bank due to poor credit or insufficient income. In a title pawn, you hand over a hard copy of your car title to the lender, but you can continue to drive it while repaying the loan.
The loan amount is usually based on the vehicle’s value, and you agree to pay a fixed monthly amount plus interest. When the loan is paid off, you receive the title back. If you fail to repay the loan, the lender can repossess the vehicle and sell it to recoup the loan amount. Title pawns offer several benefits, including the following:
- Quick cash: Title pawns offer access to fast cash, often within minutes or the same day you apply.
- Low credit requirements: Title pawns don’t require a credit check, so you can still get the loan even if you have bad credit.
- Flexible repayment terms: Title pawns are short-term loans and can be paid off quickly. You can also negotiate the terms of your repayment plan with the lender.
- Low-interest rates: Title pawns typically have lower interest rates than other types of loans, such as payday loans.
- No hidden fees: When you take out a title pawn, you know exactly what you’re paying and when.
Eligibility Criteria for Title Pawns
The eligibility criteria for title pawns typically vary by lender, but most lenders will require the borrower to fulfill the following requirements. You must:
- Provide a clear and legible photo ID.
- Be 18+ years old to qualify for a title pawn.
- Have a lien-free title to a qualifying vehicle, such as a car or truck.
- Provide proof of income, such as pay stubs or bank statements, to show that you can repay the loan.
- Provide proof of full coverage insurance on the vehicle used as collateral.
- Provide proof of residency, such as a valid driver’s license or state-issued ID.
Where to Get a Title Pawn Near You
If you’re looking for a title pawn near you, your best bet is to do a quick search online. There are many reputable lenders who specialize in title pawns and may have locations near you. Pensacolatitleloan.com is one of these lenders who is committed to helping borrowers pawn their car titles. Contact us today to learn more about our loan services