When a financial crisis arises, finding a short-term financing option to help you pick up the pieces can be challenging. Car title loans in Florida and payday loans have several similarities, but their variations can make choosing one over the other challenging. You need to compare several features to determine if title loans in Florida are suitable alternatives to payday loans.
What Are Payday Loans, And How Do They Work?
Payday loans are short-term loans due on the borrower’s next payday. Depending on the lender, the borrower can find these loans online or through a storefront lender. The due date is 2-4 weeks from when the loan is issued. However, the specific repayment date is specified in the loan agreement.
When filling out the application form, you need to provide a few details, including:
- Your name
- Your age
- Your income
- Your state ID or driver’s license number
- Contact information (email address and phone number)
- The amount you want to borrow
- A working checking accounts
You also have to meet the eligibility criteria. The lender will conduct an affordability check to ensure you can afford the amount you are asking to borrow. Most payday loan lenders will conduct a credit check to review your loan application.
To repay the loan, borrowers typically write a post-dated check for the loan amount or give the lender permission to automatically debit the funds from their checking, prepaid card, or credit union account.
Understanding Car Title Loans
Car title loans or title loans are short-term loans that typically last for 15-30 days. Car title loan lenders typically use the borrower’s vehicle as collateral. The loan amounts range from 25%-50% of the value of the vehicle.
You must give your car title to your lender to access the funds. Typically, the title should be lien-free, but some lenders will take it if you have paid a significant amount of your vehicle loan. Besides the title, you will need to provide proof of insurance and a photo ID and present your vehicle for appraisal. Sometimes, the lender may require you to provide a second set of keys for the car.
You will not get your title back until you repay the outstanding amount, including loan fees and the lender’s finance charges. A car title loan offers secured loans with a simple application.
The amount you borrow on a title loan will depend on the value of your vehicle. Title loans in Florida come with lower interest rates than payday loans. However, it is essential to note that this borrowing option risks losing your vehicle if you default on the loan.
Why Borrowers Prefer car title Loans in Florida over Payday Loans
While we cannot dispute that payday loans offer a convenient and quick way to access funds, it comes with several drawbacks. This means that payday loans are not suitable for all borrowers and could make it hard for you to enhance your financial situation.
Some borrowers consider payday loans predatory since they target people with bad credit and low income. While some mainstream lenders also do this, payday loans have earned a bad name due to how they rigorously pursue uncleared debts.
The payday loan market is more regulated, but evaluating your option is advisable before filling out a loan application. Most car title loan lenders offer flexible repayment terms and are gracious enough to roll over the loan if the borrower cannot repay the loan within the set payment date.
As mentioned earlier, most payday lenders use tough debt collection strategies. Some engage in practices intended to scare debtors into repaying their loans. Although the Financial Conduct Authority has set some regulations to control the industry, its reputation is still tainted. For this reason, most borrowers in Florida prefer taking out car title loans that are more borrower friendly.
Given that your car is the collateral, your credit history or score is not as important in your application. These loans are perfect for individuals in a financial crisis who do not have excellent or average credit scores.
Weighing Your Options
Payday and car title loans in Florida can offer a lifeline for people looking for funds to escape a financial crisis. To be sure, you need to consider these alternatives and devise a plan to pay the loan back by the end of the loan term.
Ready to get a car title loan in Florida? Florida Title has a simple loan application process to ensure you have the funds you need within a business day. Contact us to get a quote for your vehicle.
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