In recent years, payday loans have been subject to critical press and increasingly stringent state regulations. Some states have even banned their residents from applying for a payday loan to cover emergency expenses, making personal financial hardship even harder to overcome.
Though bad press and new regulations have made it hard for people in some states to get payday loans, these same regulations have not deterred the short-term loan industry from offering new and alternative borrowing options that can help solve financial woes.
In fact, there are several excellent alternatives to traditional payday loans that will still help to cover emergency expenses and get borrowers on their way to a stronger financial future.
Title Loans: Fast Approval with Securitized Lending
The idea of a payday loan is to base lending amounts and final approval on a borrower’s income. The goal is to lend an amount that can be repaid over the course of one or two pay cycles, completely eliminating the balance in a way that doesn’t require long-term commitments.
Title loans against cars are done in much the same way, but there are some key differences. Unlike payday loans, title loans are secured by property and require a bit more information when an application is submitted.
Consider these key characteristics of a title loan:
- Free-and-Clear Vehicle Title Required: Title loans get their name from the vehicle title that certifies free and clear ownership of a car. When applicants apply for a title loan, they certify that they own their vehicle outright. Most title loans are only approved for borrowers who don’t have a current lien on their vehicle title, since this gives the lender a form of “collateral” and the ability to recuperate the cost of the loan in the event of nonpayment.
- Unique Application Information: While payday loans typically only require basic contact, reference and employment information, title loans need a bit more information to be fully approved. Borrowers will need to submit all of the information mentioned earlier, but they’ll also need to include their vehicle’s make, model, year, and current mileage. Borrowers will also need to certify that their title is free and clear, and that they are no longer making payments on the vehicle.
- Fast Approval and Funding: Like payday loans, time is of the essence when applying for a title loan and waiting for approval. Lenders understand this and, in most cases, will approve the loan within only a few minutes or hours after the completed application is submitted. In most cases, the loan balance will be in the borrower’s bank account just one business day after they’re approved for the loan.
- Short-Term Repayment Structure: Title loans are often repaid within just a few weeks of loan disbursement. Some loans are fully repaid in as little as two weeks, while others might be extended by 90 days or more. Flexibility allows lenders to work with borrowers based on their ability to repay, the size of their loan, and their state’s regulations.
- Larger Loan Potential: Title loans base the loan about on the value of a borrower’s vehicle. This often allows title loan amounts to be higher than comparable payday loan amounts. For exceedingly high emergency expenses, this is a major advantage of title loans.
While the benefits of title loans are attractive to many, they’re also out of reach for people who simply do not own their vehicle.
Borrowers who are financing a vehicle simply don’t qualify for title loans. In states where payday loans aren’t available, this reality might seem to be a dead end.
Luckily, there are more payday loan alternatives to consider.
Loans that Require a Vehicle Registration Instead
In the world of short-term loans, payday loans and title loans often steal the show. Even so, registration loans are an increasingly popular option for borrowers who are still making payments toward the outright ownership of their vehicle.
In terms of loan features and requirements, a registration loan is in between payday and title loans. Here’s what borrowers need to know about applying for a registration loan:
- No Clear Title Required: Many people take out multi-year car loans and find themselves excluded from the title loan marketplace. With a registration loan, borrowers can qualify for a loan as long as they have an active vehicle registration. That means borrowers must possess a car of their own, but they can still be financing the purchase price. It also means that repossession of the vehicle is not pursued in the event of nonpayment. Furthermore, no lien is placed on the borrower’s vehicle title as they make registration loan payments.
- Detailed Application Information Required: Lenders will still base the final loan balance on a combination of the vehicle’s value and the borrower’s monthly income, so prepare to have this information available when filling out the electronic application. A loan against car value requires borrowers to supply the car’s make, model, year, and mileage, as well as personal contact, reference, and employment information.
- Quick Approval, Funding, and Repayment: Like other short-term lending products, title and payday loans included, obtaining a registration loan is pretty quick. Approval takes place within just a few minutes or hours, while the balance itself is often in a borrower’s bank account the next business day. Repayment typically takes anywhere from two weeks to three months.
So, How Does the Application and Approval Process Work?
As with all short-term loans, lenders want to make it as easy as possible to quickly get much-needed funds and move on from a financial hardship. To that end, the approval process is designed to take no more than a few hours, in most cases.
The first step involves simply filling out the loan application and supplying required information. Among the required details when applying for a title or registration loan:
- Free-and-clear title (title loans only)
- Current vehicle registration (for a registration loan)
- Vehicle made, model, and year
- Current vehicle mileage
- Current address, phone number, and email address
- Current employment and income information
- Personal references (for most loans)
With this information available, it will only take a few minutes to fill out the online application for one of these crucial loans. The application can be submitted as soon as all information required has been provided.
When the final application is submitted, an instant loan estimate will be generated based on the borrower’s vehicle title information or their employment information.
This instant estimate may be subject to change when the application is reviewed by a loan representative, however.
After the application is submitted, a loan representative will review key details for accuracy and make a final determination both on loan approval and on the amount of the loan.
They’ll call borrowers to discuss the application’s details, communicate the approval decision and loan amount, and advise to the next required steps. In most cases, a title loan with no job will be fully funded and available in a borrower’s bank account one business day after approval.
The repayment process will typically begin two weeks after the loan is funded, or when the borrower gets their next paycheck, whichever is sooner.
Why Opt for Registration and Title Loans?
Financial hardship is all too common, with many loan options that seem like they might help solve the situation for struggling consumers. Though the options seem numerous, short-term loans based on a clear title or vehicle registration have a few key benefits.
Consider these benefits when deciding whether to submit a loan application:
- Short-term repayment periods, often lasting just a month or two, means that borrowers can quickly move on from their financial hardship and avoid committing to years of loan payments at a traditional bank.
- These loans offer far quicker approval than conventional loans, often within a few minutes or hours. Other loans might require borrowers to wait several days or even several weeks. When an emergency expense arises, it’s simply not practical or even possible to wait this long for money to cover the balance.
- Approval is based on a vehicle’s value or a borrower’s income, rather than credit scores and existing banking relationships. This means that borrowers are approved at far higher rates for short-term loans than they would be for competing products at major banks. In fact, the vast majority of title lenders don’t even pull a conventional credit report when analyzing an application for approval and maximum loan amounts.
- Stringent state regulations ensure that registration and title loans are offered in an affordable and ethical way. Borrowers can enjoy peace of mind, both from resolving their personal financial crisis and from dealing with a responsible, tightly regulated lender.
These benefits make short-term loans the best option for emergency expenses and unforeseen financial hardships for most people. To get started with these loans, which are quicker, easier, and offer far higher approval rates, begin an application today.
A loan representative will be available to assist with any concerns, from application submission to approval.