A payday loan can be a wonderful option for quick cash in an emergency. However, some people have difficulty with various requirements of payday loans. The repayment expectation set by the lender is usually 14 days. The short repayment arrangement may cause borrowers to have difficulty repaying the loan. Additionally, many payday loans have very high interest rates, and the loan amounts are low. The following are some payday loan alternatives you may want to consider before you receive a payday loan.
Car Title Loan
A car title loan is an excellent alternative to a payday loan. Title loans are cash advances that lenders issue on the value of borrowers’ vehicles. Some borrowers can qualify for larger title loans if they have newer vehicles. Most title loans range from $500 to approximately $5,000. Payday loan sums rarely exceed $2,500.
Title lenders give borrowers more time to repay advances than most payday lenders do. The average life term of a title loan is approximately 30 days. Although 30 days is still a brief period, it gives the borrower time to gather two to four paychecks before repaying the advance; this allows the people to gain sturdy financial footing before having to part with large sums of money.
Title loans have about the same interest rates as payday loans. The interest rate can vary from lender to lender. However, one thing that is different about the title loan is the lien clause. To obtain a title loan, the borrower must allow the lender to place a lien on a vehicle. You must also have full ownership of the vehicle you are borrowing against. You keep your vehicle during the course of the loan, but there is a risk that you can lose the vehicle for nonpayment.
An installment loan is another financial option if you can accept some aspects of payday loans. An installment loan has the same qualifications and requirements that a payday loan has; in fact, many installment lenders are also payday lenders. The difference between the two loan types is the repayment period. Installment loans can have lives of approximately 90 to 120 days, with monthly payments occuring over this period of time. Some lenders even allow the borrower up to one year or more to repay the advance, providing ample time to get back in financial shape before payment is due.
Applying for Payday Loan Alternatives
The title loan process is slightly longer than the installment loan process because it requires a vehicle inspection. Generally, a title loan applicant applies online or in person. Once someone has inspected the vehicle, a finance officer can give the borrower an offer on its value. Installment loans work the same way that payday loans work. The applicant must have a stable job, fair income, and a bank account from which funds can be withdrawn.
Featured Image: DepositPhoto/ karenrPosted on May 5, 2023