Table of Contents

  1. What are Registration Loans?
  2. What are Payday Loans?
  3. Key Differences Between Registration Loans and Payday Loans
  4. Tips to Choose Between the Loan Types
  5. Is a Car Title Loan a Viable Option?

When financial emergencies hit you can need cash, and fast! However, this can be a real problem if you don’t have the credit for a traditional bank loan, or you don’t have a bank account.

Fortunately though, this doesn’t mean you don’t have options. You may be able to get a payday loan, or you may qualify for a registration loan. While both are short-term borrowing options designed for quick cash access – regardless of your credit situation – there are some distinct differences between them. Here’s a look at registration loans vs payday loans.

Considerations for choosing between a registration loan and a payday loan.

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What are Registration Loans?

Registration loans allow borrowers to use their vehicle’s registration as collateral to access fast cash – typically between $200 and $1,500. These loans require you to have a valid vehicle registration in your name – in the state where you’re applying – and be at least 18 years old. You must also usually have proof of income, a valid Social Security number or ITN and an active checking account to receive and repay your loan.

The loan process often begins with an online application. Most registration loan lenders will also run your credit. While a bad credit score won’t necessarily prohibit you from getting a registration loan, it can limit how much you borrow.

Lenders will focus on the equity in your vehicle and your ability to make loan payments when evaluating your eligibility. You can usually expect an approval decision within minutes. I You could have your cash in hand by the following day when you’re approved, and you can still drive your car while making on-time payments.

Registration loans are only available in a limited number of states where lenders can place a lien on vehicles, even if there is an existing lien. They are primarily accessible to residents in Arizona.

What are Payday Loans?

A payday loan is an unsecured loan that typically comes due on the borrower’s next pay date.

Payday loan requirements differ by lender and state, but you’re usually required to be at least 18 years old, have a valid photo ID, proof of income and reside in the state where you’re applying. Some states also require applicants to meet a minimum monthly income amount. Lenders usually require an active bank account, along with a Social Security number, email address and phone number.

Some states limit payday loan amounts, which typically range from $100 to $500. If you’re approved, many lenders require you to write a check for the full amount owed – including fees – or authorize the lender to withdraw funds electronically from your bank or prepaid account. Your cash may be available the same day or in one business day. If you don’t repay the loan by the due date, the lender can cash the check or initiate an electronic withdrawal.

Key Differences Between Registration Loans and Payday Loans

While the two loan types share similarities, they also have fundamental differences.

  • Collateral. Registration loans require a vehicle registration in your name. Payday loans are unsecured, but require a bank account and a paycheck.
  • Loan amount and value. Registration loan amounts are based on your vehicle’s value and your loan repayment ability. There is often a cap on payday loan amounts, which are typically smaller than registration loans.
  • Repayment structure. Registration loans may offer slightly longer, more flexible terms than most payday loans, which carry strict next-payday repayment deadlines.
  • Risk. Failure to repay either loan may result in collection calls or even legal action.
  • Interest rates. Both payday loans and registration loans tend to have similarly high annual percentage rates (APRs) that can exceed 300%.

Tips to Choose Between the Loan Types

Generally, you may want to consider a registration loan over a payday loan if you need more than $500, want to avoid lump-sum repayment pressure and own a vehicle, even if it isn’t paid off. You may want to consider a payday loan if you have urgent needs of $500 or less and can repay the loan in full out of your next paycheck.

Consider these tips:

  • Evaluate your repayment ability. Consider whether you can repay your loan in full quickly.
  • Check local laws. In some states, payday loans and registration loans are subject to regulatory caps. You’ll also need to verify loan terms, as they must be specific to the state in which you are applying.
  • Compare total costs. Calculate the APR and fees for each loan type.
  • Explore alternatives. If you don’t qualify for a traditional bank loan, a car title loan might be worth exploring.

Is a Car Title Loan a Viable Option?

A car title loan lets you borrow money by using your vehicle’s title as collateral. To qualify for a LoanMart-serviced auto equity loan, you must be a resident in the state where you’re applying. You must also be at least 18 years old and have a consistent source of income. The vehicle must be titled in your name and have sufficient value to support the loan amount, which can reach $15,000 in most states, depending on your income. The lender determines the value of the vehicle based on its make, model, mileage and overall condition. Once you’re approved, you’ll review and sign your loan agreement and receive your funds, with no bank account required.1

With your documents ready, completing the online application for a title loan serviced by LoanMart can take just five minutes.1 You’ll need to provide a government-issued photo ID, proof of your address, recent pay stubs or other income documentation, and clear photos of your car. In some cases you may also need to provide a DMV form authorizing placement of the lien.

Once everything is prepared, the process is simple:

Regardless of which loan type you’re considering, choose wisely. Registration loans may work best for those who have a financed car but are willing to accept less money at higher rates. Payday loans may be simplest for smaller amounts than registration loans or title loans, but they can trap some borrowers in debt cycles through renewals. Car title loans generally suit those with a paid-off vehicle who need a larger amount quickly. If this is you, don’t hesitate, apply for your auto equity loan serviced by LoanMart today!