Title Loans vs. Cash Advances: Which Loan is Right for Me?

If you need money fast, there are a few loan options that can get you quick access to cash. Cash advances and title loans are two types that are readily available if you have a job or car. Here's how to decide whether a cash advance or title loan is right for your financial situation and needs.

What is a Cash Advance?

A cash advance is a short-term unsecured loan that is meant to tide borrowers over until their next payday. With this type of loan, you'll receive money in the form of cash, a check, or a deposit into your bank account. Typically, you'll repay this loan in two to four weeks, when you receive your next paycheck.

Depending on the lender, you may have a few different options to repay the loan, such as writing a postdated check when you apply or permitting a direct debit from your bank account on your payday. Cash advances are available through lenders in many areas and they can get you quick access to cash, often within a few hours.

What is a Title Loan?

A title loan is a secured loan where you offer up your car as collateral. When you apply for the loan, you'll need to present the lender with your clean title. A clean title means your vehicle is paid off, and there are no liens or existing loans outstanding. The amount of money you receive will be based on the value of your vehicle.

Title loan companies will provide you with fast access to cash, and many offer repayment terms that require you to pay back the loan within a short timeframe (30 days is standard). Failure to repay the loan in full means the lender could repossess your car.

When Should I Get a Cash Advance vs. a Title Loan?

Cash advances make sense for borrowers who can commit to using the money from their next paycheck to repay the balance. Those who can't repay on time might find themselves in a situation where they're paying more in interest and fees than desired.

Cash advances may be right for borrowers who:

  • Need smaller amounts of money (often less than $1,000)
  • Receive steady paychecks
  • Aren't willing or able to use collateral like their vehicle

Like cash advances, borrowers should only use title loans when they can repay the money based on the terms agreed upon. Since you can often borrow much more using a title loan, these loans may also be better in situations where you need more cash.

Title loans may be right for borrowers who:

  • Own a vehicle with a clean title in their name
  • Need more money than cash advances can offer

The Bottom Line

Cash advances and title loans are ways to get quick access to cash when you need it. The type of loan you choose may depend on whether you have access to a steady paycheck or a clean title and how quickly you can repay the amount borrowed. As with any loan, be sure you fully understand the repayment terms before applying.

Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.

Source: iQuanti, Inc.

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Categories: Personal and Family Finances

Tags: cash advances, financial news, financial services, personal finance, title loans