Is A Title Loan Or A Payday Loan Better If You're Self-Employed?

If you're self-employed, getting a payday loan requires extra paperwork to prove that you'll have enough income coming in to pay back the loan. This may seem like a more onerous process that makes it harder to get a payday loan when it's really not. However, if the payday loan place you're near also offers title loans, you might think those would be better for you because there are fewer hoops to jump through if you own a car. However, you have to look at all aspects of the application because in some cases, providing that extra paperwork for a payday loan may be better.

Risking Collateral vs. Income

With title loans, you use your car as collateral to get the loan; it's a fairly simple process. With payday loans, as a self-employed person, you'd need to submit taxes, bank statements, and reference names and contact numbers. It sounds initially like a title loan would be easier.

But that conclusion doesn't take risk into account. If something happens and you can't pay back your payday loan, you can call the company and discuss extensions, second loans, and simple penalty fees. If something happens and you can't pay back a title loan, the risk is a little scarier. You may still be able to get an extension, but if there's a mistake, your car is on the line. Knowing that, maybe that extra payday loan paperwork is a lot friendlier now.

Loan Size

Payday loans for the self-employed are typically smaller than title loans because title loans are based on the value of your car, which can be rather high, versus the potential value of your next project pay, which could vary. So if you need a really big amount of money in your loan, a title loan might be the only option. But if you need only a small amount, like $100 or so, a payday loan would be better because, again, you're not putting your car on the line for a small amount of money.

Repayment Schedules

Payday loans often have a repayment requirement of paying by your next pay date. If you're self-employed, this obviously changes every week. You might be able to get a repayment plan where you can pay within a month or so, but double-check that first. If you can, then a payday loan could be worth the application paperwork.

Choose a couple of payday places near you and start asking about what they need for a self-employed person to get a payday loan, what the limits are, and how those compare to the process of getting a title loan. The company that lends you money wants to get it back, so the workers there should give you the information you need so you can start the application process. For more information, contact a business like EZ Check Advance