Best Payday and Title Loan Companies

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Best Payday and Title Loan Companies

Payday and title loans are short-term loans that give you a cash advance on your paycheck or use your car title in exchange for immediate funds. These quick loans are intended to be short-term solutions for unexpected or emergency expenses.

In this guide, we explain terms, fees and what else to look for when choosing the best payday and title loan companies for your situation.

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What is a payday loan?

A payday loan is a type of short-term borrowing where a lender extends high-interest credit based on a borrower's income. Typically these loans are for smaller dollar amounts (i.e., less than $1,000). The principal is typically a portion of a borrower's next paycheck — hence the name, “payday loan.”

A ConsumerAffairs reviewer from South Carolina said she used a payday loan lender for quick cash despite the higher interest rate because it’s intended to be short-term.

“... it shouldn't be used for long-term or it will be difficult to get paid down due to the interest,” she explained. “But this is exactly what I wanted. Access to quick cash for short-term use when I have a paycheck coming and I just can't cover something.”

How payday loans work

Borrowers can apply for a payday loan through a simple application, usually questions about their employment status and income. If approved, the lender presents a loan agreement outlining the payday loan’s terms. These terms include the loan amount, interest rate and repayment date, which is typically the borrower's next payday.

Borrowers can expect to receive funds the same day or next day. When the repayment date arrives, the lender automatically withdraws the loan amount plus interest and fees from the borrower's account. If the borrower cannot repay the loan on time, some lenders may offer an extension for an additional fee.

» MORE: Average personal loan interest rates

What is a title loan?

Title loans are a type of secured loan that allows borrowers to use the title of their vehicle as collateral. Since the lender can place a lien on your vehicle, it typically is fast and easy for most borrowers to qualify, regardless of credit score. The biggest risk with this type of loan is that if you default on the loan, the lender can repossess your car and resell it to pay off your debt.

One Mississippi reviewer did not have a good experience with a title loan. He said, “I had to get a title loan for my BMW and wished I had never seen this place. You will pay back 3 to 4 times your loan.”

How title loans work

Title loans work similarly to payday loans. While payday loans don’t require collateral, title loans allow borrowers to use their vehicle as a way to secure fast financing. Many title loan lenders will require borrowers to own their car outright or at least have a significant amount of equity in their car.

Borrowers can expect a fast application — as quick as 30 minutes. Once approved, the lender will detail the terms of the title loan and borrowers can receive financing the same or next day. The loan will need to be repaid within 15 or 30 days.

» MORE: Can I use my car as collateral for a personal loan?

Payday loans vs. title loans

Payday and title loans have different loan terms and restrictions. Payday loans are unsecured cash advance loans that are typically issued in amounts of $300 to $1,000. Title loans go as high as $10,000 or more and must be secured by a vehicle.

When deciding between a payday loan and a title loan, keep in mind that both come with high interest rates and fees. Both also come with significant consequences for failure to repay. Defaulting on a payday loan can result in a lawsuit and wage garnishment, and defaulting on a title loan can result in your vehicle being repossessed.

What to look for in a payday or title loan

If you decide that a payday or title loan is the best financing option for your circumstances, you’ll want to compare each lender’s terms, rates and fees. Consider the following before accepting any loan term.

Maximum loan amounts are typically one paycheck or 50% of your car’s value.
  • Loan qualifications: While you don’t need a good credit score or long credit history, you will need to prove you have reliable income and a permanent address. For title loans, the lender might also require you to have a vehicle with a clear title in your name.
  • Interest rate: Expect an interest rate between 300% to 400% — though some states have caps on the annual percentage rate (APR) for these types of loans. It is a good idea to use a loan calculator to see how much your quick loan will cost you and if it is worth it in the long run.
  • Additional fees: Lending companies often charge additional fees, such as processing fees and late fees, which can add up quickly. Read the fine print.
  • Maximum loan amount: Payday loans can be for any amount, but are traditionally only written in the amount of one full paycheck (or less) so borrowers have the money in their account to repay the loan when their next check is cashed. Title loans will vary by state but the max is typically between 25% and 50% of the vehicle's value.
  • Length of loan: A payday loan usually has a term lasting from two to four weeks and a maturity date that aligns with your pay date. Title loans are commonly due within 15 or 30 days, but some lenders will give borrowers more time to repay the loan.

» MORE: What is the best personal loan term?

What to avoid in a payday or title loan

Unfortunately, payday and title loans are often associated with scams. Knowing how to spot a bad situation is imperative when considering these types of loans. “There are red flags to avoid,” said Jonathan Feniak, a former financial advisor and general counsel at LLC Attorney.

“For instance, avoid lenders who don't perform credit checks, as responsible lenders need to assess one's ability to repay the loan. Beware of lenders who pressure you into borrowing more than needed or rolling old debts into a new loan. Also, steer clear from loans that have excessively high APRs or those requiring an uncomfortable level of collateral that outweighs the loan's value. While these loans may be attractive in emergency situations, they may lead to detrimental debt cycles if not handled carefully.”

The following are things to avoid in a payday or title loan:

  • Sky-high interest rates
  • Too many additional fees
  • Significant consequences
  • Guaranteed approval
  • Payment upfront
  • Pushy salespeople
  • Unregistered lenders
  • Poor reviews
  • Poor communication
  • Requests for untraceable payment methods
  • Loan offers over the phone
  • Promised debt cancellation
  • Unverifiable website, phone number or address

Other types of quick loans

Payday loans and title loans are a type of quick loan — meaning you can get fast cash, typically within 24 hours, without needing to meet strict credit requirements.

Here are a few other types of quick loans that are available:

  • Interest-only payment title loans: These loans work similarly to traditional title loans, but their repayment strategy is different. With interest-only payments, borrowers first pay off the amount of interest on the loan. Be careful with this type of loan, as you may end up paying more than you borrowed and still not pay off the loan.
  • Pawnshop loans: With a pawnshop loan, you take a loan out against an asset you own outright, such as jewelry, electronics, instruments, antiques or collectibles. If you cannot pay the entirety of the loan according to the agreed-upon terms, the pawnshop sells your item to recoup its losses.

Alternatives to payday loans

The quickest and typically cheapest option to acquire funds is to ask a friend or family member. Keep in mind that option may be more trouble than it’s worth, as it could come with strings attached and the risk of ruining a relationship with someone you’re close to. If turning to family in your time of need is not an option, these alternatives are worth looking into.

  • Payday alternative loan (PAL): PALs are offered by credit unions as a safer alternative to costly payday loans. These loans are smaller and shorter term than traditional personal loans.
  • Local assistance programs: Depending on your current need, there might be short-term and long-term financial assistance programs available to you through your city or the federal government. Additionally, some nonprofit organizations and charities provide emergency assistance with things like rent or utilities.
  • Personal loans: If you have a good credit score and stable income, a personal loan through a lender, bank or credit union will give you better rates and loan repayment terms. Some lenders even disburse the money into your account the same day or within one to three days.
  • 0% APR credit card: Again, you will need a good credit score to get approval, but certain credit cards have an introductory 0% APR for up to 18 months.
  • Peer-to-peer loans: Peer-to-peer (P2P) lending is not as popular as it used to be, but you can still find a couple of companies that offer this service.

» MORE: 11 payday loan alternatives

FAQ

What are the signs of a payday loan scam?

Signs of a payday loan scam may include guaranteed approval, demands for upfront payment and cold calls. You also want to avoid lenders that are not registered in your state. Walk away if you feel pressured to sign an agreement before you fully understand it.

Can I get a payday loan online?

Yes, you can get a payday loan online but be cautious as there are many scams. Ensure the lender is licensed to operate in your state and check their reputation and reviews on trusted, unbiased websites.

Is it easy to qualify for a payday loan?

Generally, qualifying for a payday loan is easier than other types of loans. Lenders typically require proof of income, a valid ID and an active bank account. However, the ease of qualification does not negate the potential financial risks associated with these types of loans.

Are payday loans illegal?

The legality of payday loans varies by state in the U.S. In some states, they are legal while others have banned them outright or set APR caps that effectively outlaw them.

What happens if I don’t repay my payday loan?

If you don't repay your payday loan, the lender may charge late fees, send your account to a collections agency, report your nonpayment to credit bureaus or even take you to court. This could negatively impact your credit score, making it harder to get credit in the future.


Guide sources

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. To learn more about the content on our site, visit our FAQ page.

  1. Consumer Financial Protection Bureau, “Payday loans.” Accessed Sept. 13, 2023.
  2. Federal Trade Commission, “Payday Lending.” Accessed Sept. 13, 2023.

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