How do Online Title Pawns Compare to Typical Payday Loans?
If you need cash urgently, a few loan options exist. You can take out a conventional loan from a bank or a credit union, a payday loan, or an online title pawn. Payday loans and online title pawns are two of the most popular options that most consumers cannot differentiate. This guide will help you understand the differences between the two so that you can determine an appropriate solution for you.
What are Online Title Pawns?
An online title pawn is a short-term loan that requires the borrower to use their vehicle as collateral. To access the funds, you need to submit your car title to the online title pawn lender. The lender will retain the title until the loan is repaid in full.
Online title pawns are similar to ordinary pawn loans in that they are secured by an item of value, in this case, a vehicle. However, unlike typical pawn loans, which require you to provide the item used as collateral to a physical pawn shop, you can acquire an online title pawn by filling out an application.
Online title pawns are often used as quick funds for people who need money fast and have exploited other funding options. They can be expensive, with high-interest rates and fees, and are generally not ideal for long-term financial problems. If you are considering taking out an online title pawn, it is essential to carefully consider the loan terms and ensure you will be able to repay the loan on time so that you can avoid losing your vehicle.
What are Payday Loans?
Payday loans are loans used to borrow small amounts of money for a short period, typically until you receive your next paycheck. Payday loans are designed to offer a quick and easy way to obtain funds in an emergency or when other credit sources are unavailable.
To obtain a payday loan, you may need to provide the lender with a post-dated check or grant permission for them to withdraw funds from your bank account on the due date. The lender will then offer the requested loan amount in exchange for a fee, typically a percentage of the loan amount.
Payday loans are generally easier to qualify for than other loans because lenders do not focus heavily on your credit report. However, they are often more expensive than other online title pawns due to their high fees and interest rates. Payday loans should generally be used as a last resort, as they can be expensive and lead to a debt cycle if they are not repaid on time. It is essential to consider the terms of a payday loan and establish a solid plan to repay the loan on time before taking one out.
Differences between Title Pawns and Payday Loans
There are several key differences between payday loans and online title pawns. They include:
Payday loans are unsecured, meaning they do not require collateral to be put up as security for the loan. On the other hand, online title pawns are secured loans that require you to put up their vehicle as collateral.
- Loan amount
Payday loan lenders typically have smaller loan amounts than online title pawns. The loan amounts range from a few hundred to a few thousand dollars. Online title pawns can be for larger amounts, depending on the vehicle’s value being used as collateral. Online title pawn loan amounts typically range between 25%-50% of the vehicle’s value.
- Repayment terms
Payday loans are typically due to being repaid in full before or on the borrower’s next payday. Online title pawns may have longer repayment terms, ranging from a few months or more.
- Interest rates
Payday loans often have high-interest rates, with some charging annual percentage rates (APRs) of 300% or more. Although online title pawns may have high-interest rates, they can vary depending on the lender and the borrower’s creditworthiness.
Both payday loans and online title pawns can have fees associated with them, including origination fees, late payment fees, and fees for rolling the loan over. These fees can significantly increase the overall cost of the loan.
Apply for a Panhandle Title Loan Today
If you are considering taking out one of these loans, it is important to carefully consider the terms and ensure that you can repay the loan on time. At Panhandle Title, we provide online title loans with fast approvals at competitive rates. Are you ready to take out a Panhandle title? Call us at (850) 785-22274 to get started today.