There are two main types of loans available for borrowers with bad credit or no credit:
- Payday Loans
- Title Loans
What’s a Payday Loan
A Payday loan is a short-term loan, normally meant to cover an emergency expense. Payment is typically due within two to four weeks, hence the name. Unlike something like a vehicle loan or a mortgage, a payday loan can be spent on whatever you want.
How much money can I get for a Payday loan in Alabama?
A payday loan in Alabama may not exceed $500. Additionally, you aren’t allowed to have more than one loan at a time from a given lender and there is a cooling off period between loans.
What’s the interest rate on a Payday loan in Alabama?
The maximum APR is 456%. In other words, if you borrow $500, you may have to pay $190 in interest per month. There can also be finance charges up to 17.5% of the amount borrowed, so $87.50 on a $500 loan. This means you may pay $277.50 in interest and fees on a $500 Payday loan, totaling $777.50.
When do I need to pay my Payday loan back?
The term for payday loans in Alabama is between 10 and 31 days.
What happens if I can’t pay my Payday loan back?
As with other unsecured loans, if fail to pay your loan back there are a number of things the lender can do.
- The lender may notify Equifax, Experian, and TransUnion, the three major credit bureaus. This may lower your credit score.
- If the payday loan lender can’t take the payment out of your bank account because there isn’t enough money in it, they can charge you a one-time $30 NSF fee.
- The payday loan lender may sue you. If they win, you may also be responsible for some of their court fees, up to 15% of the original check amount.
- The lender may initiate criminal proceedings against the borrower if they go to withdraw money from an account and the account has been closed.
If you want to avoid all of the above, you may have the option of rolling the balance of your loan into a new payday loan, but you can only do this once.
How does the rollover work?
Rolling your payday loan over into a new loan extends the amount of time you have to pay it. Normally, you must pay a fee, and potentially a portion of the original loan. You’ll be responsible for the balance of the original loan, plus any new fees and interest accumulated during the extension.
What happens if my lender sues me over my Payday loan?
If a lender takes a borrower to court for the balance of their payday loan, the borrower will have to argue in front of a judge as to why they shouldn’t be required to pay their loan back under the original terms. If the judge sides with the lender, the court will force the borrower to repay the loan. This may be done through taking money directly from the borrower’s paycheck and giving it to the lender.
What are Title Loans?
A title loan is another type of short-term loan available in Alabama. They use a qualifying car title as collateral for the loan.
How do Title loans differ from Payday loans in Alabama?
As with payday loans, you can use money from title loans for difficult financial times, unexpected bills, emergencies, etc. However, title loans are secured loans. Because you are using your qualifying car title to apply for the loan, you can usually get more money at a better interest rate than with an unsecured loan, like a payday loan. Additionally, you can continue to use your car as normal during the life of the loan. However, if you fail to pay the loan back, the lender can repossess your car after 30 days, unless you pay them back within that time.
Title loans have a number of advantages over Payday loans:
- The maximum monthly interest rate is 25%
- Alabama has a Right to Cure period of 30 days for title loans. This means you have a 30-day grace period to finish paying your loan before the lender can repossess your car or notify credit agencies. If you pay off the loan during the grace period, you may be responsible for an additional interest payment.
- Maximum loan amount is determined by the value of your vehicle and your ability to pay, rather than being capped at $500. This means you may get more money with a car title loan.
How to get a Title Loan with LoanMart
If you are interested in potentially using a title loan to pay for an unexpected financial obligations or bills, all while keeping the use of your car, LoanMart may be able to help you. If you possess a qualifying title of a car in your name, you may be eligible for a title loan of up to $30,0001. And because of LoanMart’s streamlined sign up process, you might be able to get your funds in less than 24 hours after inquiring3.
With our easy process, we give you three ways to contact us that make it convenient for you:
- Visit a participating location
- Call us at 1-855-422-7412
- Sign up online without leaving your home
Once you know how you want to get in touch, just follow these steps to get the money you need:
- Fill out the registration form
- Submit your important documents to your LoanMart representative
- Sign your LoanMart agreement
- Collect your funds!
If you find yourself in a situation where you need some emergency funds, don’t let poor credit or no credit keep you in financial trouble. Use your qualifying car title to see if you are eligible for a title loan today1!