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Short-Term Loans Compared (Title Loans, Payday & More)


Ever since the economic meltdown of the mid-2000s, and the credit crunch that followed thereafter, folks without picture-perfect credit and a spotless record of repayment have had a bit of a tough time getting their hands on loans and quick capital.

Nontraditional lending services have popped up left and right to meet these needs, offering individuals an opportunity to secure the kind of capital they need without the hoops, hurdles, and obstacles placed in their way that traditional lenders inevitably bring to the table.

At the same time, not all short-term loans are created equally. While some loans may suit one borrower, another may be a stepping-stone to a slippery slope of financial disaster. However, with the proper understanding of short-term loans, borrowers may find financing that can help them get back to recovering from the financial missteps of the past.

Below we highlight a number of different nontraditional lending opportunities that you might want to consider taking advantage of moving forward. Let’s dive right in!

calculator for title loans

Car Title Loans

Title loans are one of the fastest growing financing options for borrowers with poor credit. Auto title loans allow borrowers to use their vehicle’s equity as collateral. However, they are not the same as an auto equity loan.

Most borrowers that consider title loans need quick cash in large amounts, a need that can’t be fulfilled by other short-term options like payday loans. The requirements for title loans are also less stringent. Title lenders usually require a clean title, a government-issued ID and a borrower that is over the age of eighteen. However, some lenders do require additional documents like proof of insurance and income.

While not as expensive as Payday Loans, car title loans are still costly and in some states are considered predatory. You can expect the interest rate on a title loan to range anywhere from 25% - 40% a month. Additionally, if a borrower is not able to pay off their loan or make payments towards the accrued interest, the lender has every right to repossess the loan’s collateral. For some, the threat of repossession is a deal breaker. For others that are confident in their ability to repay, a title loan is a great option for cash as soon as the next day.


Payday Loans

Sometimes described as a cash advance loan, payday loans allow individuals to take out a line of credit against the paychecks that they are already bringing home – usually with higher than traditional interest rates attached to them.

Offering quick cash to anyone and everyone with a steady job and a provable paycheck, payday loans are going to be based off of your take-home pay (according to your checks) and can usually be taken advantage of for anywhere between $500 and $1500 or more.

You will obviously want to understand the repayment terms that you are agreeing to before you jump on top of an opportunity like this. You’ll need to know how quickly you need to repay your payday loan, the interest rates associated with your payday loan, and any prepayment penalties you may end up being strapped with if you pay off your payday loan ahead of schedule.

You will also want to know how quickly your lender will disburse your funds and what methods your lender uses to deliver them – in cash, with a check, or a direct deposit into your account.

Installment Loans

Installment loans are another popular type of alternative lending option available to be taken advantage of these days, giving individuals the chance to repay their loan over a scheduled amount of time with scheduled installment payments made every step of the way.

These kinds of loans can be incredibly advantageous to leverage by folks that know exactly how much money they need right up front and right out of the gate, as well as those that have the financial discipline to repay these types of loans over time according to the schedule.

Again, interest rates are usually a bit higher than the interest rates you’ll encounter from traditional lenders when you go with an installment loan. You’ll also want to look into any prepayment penalties, as most of these lenders count on high interest rates over a set amount of time to make their money.

title pawn shop

Title Pawn Loans

According to the financial industry, nearly 80% of the US population over the age of 18 simply wouldn’t be able to cover an emergency bill of $500 or more.

Should you or someone you care about find yourself in the middle of a financial emergency without cash on hand to cover your expenses, title pawn loans – sometimes just called title loans – give you an opportunity to put up your automobile as collateral to secure plenty of funding for the loan that you need so desperately.

These kinds of loans work the same way that all other collateral loans work. The title of your vehicle is your collateral for the loan amount that you take out. As long as the loan remains active and payments are made as scheduled, you will maintain ownership of your vehicle. However, title loans differ from title pawns in that title loan lenders allow you to drive your car while pawnbrokers keep your car during the duration of your title pawn.

Different pawnbrokers are going to have different repayment schedules, interest rates, and maximum values that they are willing to offer their clients. Usually these kinds of loans are dependent upon the actual value of the vehicle you are putting up for collateral – but it’s always encouraged to take as little money from lenders as possible so that you can repay the loan quickly and gain total ownership of your vehicle again without any headache or hassle.

Auto Equity Loans

Auto equity loans work very similarly to auto title loans, but can be taken advantage of regardless of whether or not you actually have the title in your possession or not.

You’ll be putting up the equity in your vehicle that you have been paying off on as collateral against the loan you are leveraging, and as long as you maintain the financial discipline you need to continue making payments you won’t have anything to worry about. Should you miss a handful of payments or begin to slip behind and negate the terms of your auto equity loan, your vehicle may be in jeopardy and your credit score may incur significant damage.

Closing Thoughts

At the end of the day, most people agree that it is nice to know that you have plenty of opportunities available to take advantage of should you need quick cash in a hurry without a picture-perfect credit score.

But like every other major financial decision you make in your life, you want to be sure that you can cover all of your loan repayment terms without any headache or hassle, that you aren’t going to become even more financially strapped later down the line, and that you’re making a smart move for the short and long-term.

Use the information above to help you find the right lending opportunities and you won’t have much to worry about moving forward.

Car Title Loans Explained: Frequently Asked Questions


What is a car title loan?

A car title loan is essentially a collateral loan, giving everyone – even those without picture-perfect credit – the opportunity to get financing for expenses such as rent, medical bills, car repair, and more using their car’s title.

These kinds of loans can put anywhere between $500 and $15,000 or more cash in the hands of those that wouldn’t have been able to take a loan out otherwise. Because they use valuable collateral to secure the loan, most everyone is eligible and will be approved after the short application process has concluded.

What are the benefits of a title loan?

There are a number of big benefits individuals will be able to leverage when they take advantage of car title loans.

Right out of the gate, you’re going to be able to guarantee yourself a shot at a loan of anywhere between $500 and $15,000 (and potentially more) – depending entirely upon the actual value of your vehicle. This gives you the opportunity to get cash immediately without having to go through a long, drawn out, and sometimes risky traditional loan process.

Another benefit is that you are going to be able to continue driving your vehicle and using the vehicle that you have put up as collateral the same way you were before you move forward with a car title loan. No one will come and take your vehicle after you put it up, no one’s going to tell you how to use your vehicle, and you’ll still be able to take advantage of the loan even if you put 1000 miles – or more – on your car over the life of that loan.

The almost instant payout of these title loans is one of the bigger benefits you will enjoy. After you are approved for this kind of loan you’ll be able to take advantage of that cash almost immediately. Cash will be offered to you if you are approved in person, but you’ll also have the opportunity to receive a direct deposit within 24 hours after approval, as well.

What are the disadvantages of a title loan?

There are some downsides to these kinds of loans that are important to highlight as well.

For starters, the interest rates associated with car title loans are similar to all other collateral loans in that they can be a little bit higher than more traditional lending opportunities.

Secondly, you always run the risk of not making payments in the future and having your vehicle repossessed by the individuals that you put up your title as collateral with.

Thirdly, you need to make sure that you are always working with reputable and reliable car title loan companies. You want to be sure that you can trust the individuals you’re working with to help you out and not dabble with sky-high interest rates, unreasonable repayment terms, or any other hidden tricks to separate you from your vehicle – and your money – moving forward.

It’s not a bad idea to look for companies that will report positively on your credit score as well. Not all of them have this service, but it can be a good opportunity to help you rebuild your credit moving forward.

How do I apply for a title loan online?

The title loan application process online is relatively simple and straightforward. You’ll need to find a company that offers online title loans and provide important details about yourself and the vehicle you are putting up as collateral. Then you’ll need to provide information, documentation, and potentially photographs that can confirm the information you have used on your online application to be true.

Most application processes are simple enough to be finished in five minutes and some lenders even have physical locations you can go to in an effort to speed things up even more so.

Are auto title loans online safe?

As long as you are always working with reliable, reputable, and trustworthy title loan lender, you shouldn’t have anything to worry about.

The short-term loan industry is unregulated (or at least not regulated the way that traditional lending industries are) so there’s always going to be a bit of risk associated with this kind of opportunity. At the same time, so long as you pay close attention to the reviews, testimonials, and track record that car title loan companies have accumulated over time – and choose to only move forward with the most reliable, the most reputable, and the most trustworthy operations in the business – you shouldn’t have anything to worry about.

Verify that the lender you are thinking about moving forward with uses full encryption, SSL technology, and security features that protect your personal, private, and payment information as well.

How are interest rates and fees calculated for a title loan?

The interest rates and fees that are going to be associated with your title loan are going to be unique and calculated based off of a variety of different factors, including (but not limited to):

  • The actual value of the vehicle that you are putting up as collateral
  • The actual value of the title loan that you are taking out
  • The repayment terms and duration that you have agreed to with a car title loan operation

… And a handful of other factors that will always be disclosed to you – verbally as well as in writing, down on your title loan terms sheet and contract.

It is important that you review all of this information before you sign on the dotted line and choose to move forward with any lender. Make sure you understand all of the financial details surrounding your title loan before you agree to anything, and certainly before you accept any money or put your title off as collateral.

Are title loans legal?

Absolutely! As we highlighted above, there are many car title loan companies operating online and locally. These lenders are ready to give you and millions of others the chance to get back on your financial footing and to take advantage of financial opportunities that you might not have been able to otherwise without a title loan.

Sure, the short-term lending industry is quite a bit different than the traditional lending industry, but by eliminating a lot of that regulation and red tape of these nontraditional lenders – lenders, in specific – are able to offer their loans to individuals that simply would have been able to get a loan any other way.

These kinds of agreements are 100% legal (in certain states), safe as long as you are only ever working with legitimate professionals, and can help you to improve your financial standing and gain almost instant access to capital without any headache or hassle moving forward!
However, do keep in mind that these types of loans are not available in states like New York, Iowa, Michigan and more. Please review your state’s regulations to make sure you are in compliance if you choose to apply for a title loan.

How can I find the best car title loans near me?

The internet is going to be your best friend when it comes time to search for top-tier car title loan opportunities. Obviously, you’ll want to utilize Google as much as possible (as well as the other search engine networks you are comfortable with), but you’ll also want to make sure that you are reviewing local opportunities by firing up Google Maps or a similar service to find the physical operations in your area offering these kinds of services.

What is the difference between a title loan and pawn?

All of these loans offer similar bottom-line results, but they have a handful of differences that separate them from each other as well.

A car title loan simply puts the title of your vehicle off as collateral, never forcing you to hand over ownership of your vehicle or compelling you to drive according to certain rules and regulations handed down by your lender.

Title pawn opportunities are financed directly through pawn shops, almost always come with a handful of strings attached, are incredibly short term and usually feature sky-high interest rates, and may result in your vehicle being sold out from underneath you sooner rather than later.

Auto equity loans are offered to those that have equity built up in their vehicle the same way that home equity loans are offered to individuals that own property with equity. These kinds of loans are almost always complex, convoluted, and difficult to navigate – and usually do not offer the same kind of capital that car title loan opportunities can.

Can I get a title loan if I'm unemployed?

One of the biggest benefits of a title loan is that everyone with a car title in hand can take advantage of a loan by putting up that title as collateral, regardless of any other financial details or situations you might find yourself in.

Whereas payday loan individuals aren’t going to be able to take advantage of a payday loan service if you do not have a provable income on a regular basis. In contrast, some title lenders do not require proof at all. As long as you have your title in hand the loan that you are pursuing will be based off of that collateral and that collateral alone. Everything else is basically irrelevant.

How much can I get for a title loan on my car?

It’s impossible to tell you exactly how much money you are going to be able to get for a title loan with your vehicle without knowing:

  • The make, model, year, and condition of the vehicle you are using as collateral
  • Your repayment terms and interest rates
  • The specific company that you are moving forward with for your loan

As a general rule, however, you should be able to anticipate receiving anywhere between $500 and $15,000 for the title loan you are taking advantage of. Sometimes you’ll be able to get even a bit more for the title that you are putting up as collateral. To get an idea of how much you'll receive, get the trade-in value of your vehicle from KBB or BlackBook and multiply that value by 0.5.

Can I get a title loan if I filed for bankruptcy?

Absolutely! As we highlighted above, you should have absolutely no trouble whatsoever taking advantage of a car title loan even if you have filed for bankruptcy – no matter how far in the past or how reason that bankruptcy filing may have been.

The value of the vehicle you have a title in hand for is going to be the main determining factor for whether or not you are able to receive a title loan for the amount that you are looking for. The overwhelming majority of individuals are looking for a title loan have absolutely zero trouble whatsoever receiving a loan for the amount of money they are after because of this fact!

Can I get a title loan if I filed for bankruptcy?

Car title loans are only ever going to affect your credit in a positive way, and that’s only if the company you are working with agrees to add your loan agreement to your credit score, has the capacity to do so, and is going to regularly report to all of the major credit bureaus with each and every successful payment you make.

In most cases, you don’t need to worry about these kinds of loans negatively impacting your credit, another big advantage they have over more traditional lending opportunities.

Can I get a title loan if I filed for bankruptcy?

Getting a title loan using a car that is currently being financed is very, very difficult – if not flat-out impossible. The purpose of title loans is to provide financing to subprime borrowers that own their car. Without the title, the collateral, title loans would be like any other traditional loan.

You’ll have the easiest time getting access to the cash and capital you need when you put up a title to a vehicle that you own right, a title that you and you alone have access to, and a title that you can secure all on your own.

Fortunately, there are some companies that are willing to place a second lien on your title. However, the overwhelming majority of lenders are going to require you to move forward with an auto equity loan instead – with all of the disadvantages that it brings to the table.

Who are some of the best direct lenders of Title Loans?

There are a number of different companies out there offering reliable, safe, and high quality car title loans. The best options will:

  • Have a track record for fair dealings and successful interactions with their customers that stretches back a handful of years
  • Have a policy of total transparency when it comes to repayment rules, regulations, interest rates, and fees
  • Work with you directly to guarantee that you gain access to the capital you need as quickly as possible with as little hassle and headache along the way
  • Work with you to get yourself back on secure financial footings moving forward without risking your short or long-term financial future