Many companies will offer car title and payday loans. These loans are generally at a higher interest rate and you should be caution before you choose to borrow money from one of these companies. The advertisements are also enticing with the promise of quick cash and low payments, but they often start a vicious cycle.
A car title loan is a loan that uses your paid for car as collateral. Generally the company will only loan you the value of the car, but in order to do this you must turn the title of the car over to the company who holds it until you have paid off your car. A company that offers these loans usually has a much higher interest rate than you would get through a credit union or even a bank. They may not do an extensive credit check, but you will pay for it in interest.
A payday loan is a loan where you write a check for the money and they will hold it for a few weeks before you cash the loan. Generally they charge a fee per loan amount and they require proof that you have a job. The fee for the loan would equate to close to a two hundred percent interest rate on the loan. It also starts a vicious cycle because the next paycheck you start out behind because they have already taken a portion of your next paycheck. Often people end up cycling through these loans and becoming reliant on them to pay their bills and eat.
Both of these loans should be approached with caution and avoided if at all possible. It would be better to use a credit card or to sell something in order to raise the quick cash to pay for an unexpected bill or car repair. Many consumer protection agencies are working to change the laws that affect these types of business in order to protect the customers, since most of these companies seem to prey on those who are truly struggling to get by.
If you find yourself in car title loan or a payday loan cycle you need to work to get out of it as quickly as possible. The first step is to stop taking out the loans and then finding ways to raise the extra money and putting it straight on the loans. You can do this by selling items or by getting a temporary second job.