Payday, Title, or Amortized Loans: Which One Is Best for You?
When life hits you hard and you’re not ready financially, you often need access to money fast. People commonly think of payday or title loans as a quick solution, but did you know you have a third and safer option? Amortized loans might not be your first thought, but they are likely your best option. Discover more about payday, title, and amortized loans.
1. Payday Loans: A Quick Solution With Potential Consequences
A payday loan is often a short-term loan for small amounts of money. Many loans are due on the borrower’s next payday — hence the name. When you sign up for a payday loan, you often promise to pay the principal, plus any interest and fees, in a lump sum on the determined date. The lender often gives you the money in cash, on a check, on a preloaded debit card, or straight on your banking account.
If you have the money to pay off the loan on the predetermined date, then everything should be fine. However, if your debt becomes due and you don’t have the required amount, you may be subject to sudden bank withdrawals, collection calls, wage garnishment, or even court summons.
Another alternative option that payday lenders often offer is to roll over the debt to the next payday or month. This method allows you to pay a specific fee to extend your debt. Unfortunately, you don’t pay toward your principal or the original fees — essentially, you only pay for the privilege of rolling over your debt to another date.
The roll over method might seem like a good solution initially, but as you generate more interest, have to pay more fees, and still haven’t paid back the original loan, you can find yourself in a bad cycle of debt. A payday loan can quickly turn from a safety net to a nightmare.
2. Title Loans: A Risky Solution for Your Car
A title loan is similar to a payday loan. You get a certain amount of money that you promise to pay back on a certain date. However, instead of paying back a loan on your next payday, you give over the title to a car as collateral. For car title loans, you still get to drive your car. However, some lenders might install a GPS system or get a copy of your keys, in addition to having your title.
Like payday loans, title loans often generate high interest rates that you must pay alongside the original loan amount. Unlike payday loans, if your debt comes due and you don’t have money to pay, then your title lender can take away your car as repayment. You can sometimes choose to roll over your loan, which may compound your debt.
3. Amortized Loans: A Safer Solution With Room to Breathe
Instead of worrying about short-term loans that can threaten your livelihood, consider amortized loans. These loans, which can be taken out to meet a variety of needs, are paid back through fixed, equal payments over the course of many months. These payments are applied to both the amount borrowed as well as the finance charges
Amortized loans allow you to enjoy and use the money you need without worrying about how to pay it back quickly, acquiring more debt along the way, or being uncertain of when you can finally back your loan. If you need money without lots of risk, then amortized loans are usually a good option.
If you need money quickly, turn to Ardmore Finance. We offer amortized loans that will allow you to deal with life’s emergencies in a safe and straightforward manner. Apply for your loan today.
