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By Brenda

Which is Better Car Title Loans or Short Term Loans?

Jan 23 2014 Parent Category I

If you are deciding between an auto title loan and a short term loan then it is important that you consider the pros and cons of each before you choose which one is best for your situation. Take this list of pros and cons into consideration before you make your decision.

Auto Title Loan Pro: Fast and Easy Access to Cash

This is arguably the biggest advantage of an auto title loan. There are many situations where you simply can’t wait for a more traditional type of loan to be approved, however with an auto title loan you can receive the money you need within a few hours to a few days. In fact, in some instances you can receive an answer as to whether or not you will receive a loan within half an hour of submitting a request for one.

Auto Title Loan Con: You Must Put Up Your Car 

Probably one of the biggest risks of obtaining an auto title loan is that you must put up a very valuable and often expensive item—your car. This means you are put at risk of losing your mode of transportation if you are unable to repay the loan.

Auto Title Loan Pro: You Can Easily Obtain One

Due to the fact that you are putting up a valuable possession as collateral for an auto title loan, it is quite easy to convince a lender to extend an auto title loan to you. Keep in mind that just because you put your car up for collateral doesn’t mean you can’t use it, as it will only be taken away if you default on your loan.

Auto Title Loan Con: High Interest Rates

Auto title loans often come with high interest rates, which can make it not worthwhile. It is important that you consider this before obtaining this type of loan, as interest rates will be substantially higher than that of a traditional loan or credit card.

Short-Term Loan Pro: Instant Access to Cash

Short-term loans are basically payday loans or cash advances. They provide you with an almost immediate solution to any cash-flow problem that you may have, as you will be denied or approved for a loan within a few hours of applying.

Short-Term Loan Con: Risk of a Disreputable Lender

If you aren’t careful with this type of loan you could risk taking one out with a lender who does not play fair. It is important that you make sure you aren’t being charged unfair fees or that you are not falling victim to fine or hidden print.

Short-Term Loan Pro: Small Increments of Cash

Short-term loans can be a great solution if you only need a small amount of money to get you through until your next paycheck. You could take out as little as $50 with this type of loan, and so you do not have to deal with taking out a loan for more money than you need.

Short-Term Loan Con: Very Short Term

As the name of this type of loan suggests, you must repay this type of loan within a very short amount of time, and so it is important that you create a strict repayment plan in order to avoid defaulting.

Short-Term Loan Pro: No Credit Check

You do not need to have superb credit in order to obtain one of these loans, as there are no credit checks involved in the process. In fact, even if you have no credit at all or very poor credit you can still get your hands on the cash you need.

Short-Term Loan Con: High Interest Rate

Short-term loans also come with high interest rates. In fact the interest rates on these types of loans are often higher than an auto title loan as you do not have to put collateral up in order to obtain one.

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