Shall I opt for title loans or personal loans is a question of concern if several people these days. Well before making a decision of what one should opt for let us have a look at both kinds of loans and then make a decision accordingly.
Let us have a look at the synopsis of both loans
It is noted that car title loans and personal loans are the two most widely used financial options by people. Both the loans have different ways i.e. the procedure to apply for the loan is different for both the loans and both the loans are easy to obtain if you are able to meet the needed requirements. If that is so, you must be wondering what really is the difference between the two?
The difference between these loans is that a personal loan can be used to serve different purposes but on the other hand a car title loan can be used for a specific purpose that one sticks to. Before you make a decision of which loan should be opted for. Let us analyze the difference between the two kinds of loans first.
Title loan vs Personal loan
If one needs instant loan then one might consider opting or going for a title loan for the fact that the loan approval for this loan is quick and simple and on the other hand looking at the personal loan, the process of applying for the loan and getting it approved is not that simple. Let us have a look at the difference between both the kings of the loans.
If one talks about credit score for title loans, then you should know that credit score doesn’t matter for this loan. So even if you happen to have a bad or poor credit score you need not worry, you can still apply for the loan and get approved for the same. But talking about credit score for personal loans, one should be clear and should know that credit score plays a vital role in getting this loan.
It is observed that title loans have comparatively higher interest rates than personal loans. Though personal loans also have high-interest rates, these are usually for a shorter time period, i.e. 1-3 weeks.
Need of collateral
Well, you will need collateral like car to get car title loans which is again a risky task. If you happen to fail to make any payment of the loan or face any issues in doing the same you will end up losing your collateral no matter what. On the other hand, with personal loans, you will not have to keep anything as collateral with the loan lending institution. So, in a way a personal loan is considered to be a better option by several people, i.e. lesser chances of losing any kind of asset.
Loan amount offered
The loan amount offered for a title loan depends on the condition of the collateral and the market value of the vehicle. One should always opt for the lending institution that lends good money for the loan amount for the vehicle. On the other hand, for personal loans, the amount of loan offered is fixed.
Loan tenure period
The loan tenure period for both loans is different. For instance, talking about title loans, the loan tenure period for this loan is approximately four years usually. The lenders give the borrower enough time i.e. a time span of four years to collect the loan amount and pay back the loan. On the other hand, with a personal loan, one gets a time span of 60 months to collect the funds and pay back the loan amount.
Ease of a loan availability
It is observed that title loans are way easier to get than personal loans for the fact that one can apply and get a title loan approved even with a bad credit score but on the other hand, you cannot apply and get the personal loan approved with a bad credit score. For the ease of loan availability, one applies for a title loan instead of getting a personal loan.
These are the differences between both the kinds of the loan. If you are looking forward to getting a loan to meet your financial crises with ease then you might consider opting for a loan out of these two. Make sure that you do diligent research before making a decision on the loan for yourself. Make sure that you have enough funds to pay back the loan amount no matter which loan you opt for yourself. So regardless of which loan you choose for yourself make sure that you do your homework and shop around for the best deal. You have the option and the choice of exploring banks, and other money lending institutions. Make sure you do the same and make the best decision for yourself.
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