When you need money and do not have much to pawn, there are two basic options that give you money quickly- payday loan and Phoenix auto title loan. If you look at them at a glance, both are similar as they provide you with instant cash and have high rate of interest. Both of these are short term loans and are right for those with a low credit score. But the only disadvantage is that you need to be able to repay them within the stipulated time or a very high interest rate is applicable. And you have no pre-payment penalties, so it is best to pay them off as soon as you have the needed funds.

But there is a major difference between the Phoenix auto title loan and payday loans which you need to consider carefully before you opt for any of the two. The auto title loan uses your own car as collateral but the payday loans use electronic transfer or checks that are post dated as collateral.

When you take a Phoenix auto title loan you need to pay the first installment within the first two weeks and then you will be billed every month. If you are unable to pay off the principal and the interest incurred within the first month, you still have to pay 10% of the original amount that you borrowed and 1% interest on the rest of the money. Terms and conditions of the loan can change if you keep on extending the loan. The main disadvantage is that you have your car to lose if you default on the loan but that makes you responsible to payoff the complete loan.

In a payday loan, you have affixed amount to pay as interest on every hundred dollars that you borrow. If you default on payday loan, the amount of loan increases and penalty increases accordingly. When the amount reaches a certain level, you may face legal action.

So if you are looking to take either of the two loans- Phoenix auto title loan or payday loan, think carefully, weight out the advantages and disadvantages. Look at the interest rates and other penalties that might be applicable if you default. Use a payday loan calculator and check. There are numerous lending services online that provide a auto title loan calculator to check the APR that would be applicable. It is best to consider your income and repaying abilities before you sign on the dotted line because either of the two loans comes with high interest rates.