Title Loans vs. Loan from a Friend- Which Do You Choose?

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There may come a time for many people when they need to borrow money to pay their bills or to meet a financial need. After all, USA Today indicates that four of every five Americans is going to experience or has experienced poverty, reliance on government aid or near poverty at some point over the course of their lives.  CNN also reports that 76 percent of people in the United States are living paycheck to paycheck and don’t have savings to handle emergencies.

If you get into a bad money situation and need cash, you will need to decide where to get it. One option hat you might have is to borrow money from a friend. Another option is to take out a car title loan. Car title loans can be great for people who don’t have very good credit but who own their cars. You can borrow based on the value of your vehicle while still being able to drive your car, and you can pay back the money once your pressing financial obligations have been met.  Still, you will need to decide if it makes sense for you to take a car title loan or to borrow from a friend.

Pros and Cons of Friendly Loans

There are some advantages to borrow money from a friend. One benefit is that your friend probably is not going to charge you anything for the privilege of borrowing. Most people who are willing to lend money to their friends don’t charge a fee or do not charge interest. If you take any kind of other loan, from a credit card to a bank loan to a car title loan, you are going to have to pay in order to borrow.  On this criteria alone, therefore, borrowing from a friend is a better choice.

However, the cost of borrowing is not the only factor that you need to think about. You also need to consider the value of your friendship. When you introduce money into the dynamic, it is going to invariably change how you two relate to each other. You might feel embarrassed about borrowing the money, or beholden to your friend or even resentful of the fact that you now feel as if you owe your friend something. Your friend might also feel unhappy and resentful about lending you the money and may start to judge your spending or money decisions. You could put a lot of strain on the relationship even if you do end up paying back the money you borrowed in full. It is possible your relationship might not ever recover back to the way it was.

The Title Loan Doesn’t Affect Your Friendship

This is not something you need to worry about when you take on a car title loan since you don’t have a relationship with the lender. You can use a site like TitleMax to quickly and simply take out a car title loan with no feelings of guilt and no risk of ruining an important relationship.  On this criteria therefore, borrowing from a Title Loan is a far better choice for you.

Another thing to consider is that you might put your friend in a bad financial situation by asking for money. Most people really don’t have a ton of extra cash sitting around that they can just loan to others for weeks or months. If you ask for a loan, your friend may find himself feeling obligated to give it to you, especially if he knows you really need it. This could end up putting your friend into a situation where he is tight on money.

The longer it takes you to pay back the loan, the worse that this would be for your friend. You don’t want to do this to someone you care about. Car title loans, on the other hand, are issued by companies set up specifically for that purpose. You don’t have to worry about taking a financial risk with your friend’s money when you take a car title loan.

So, Where Should You Get Your Loan From?

For all of these reasons and many more, it just makes sense to take a car title loan instead of borrowing from a friend. The transaction will be a clean business transaction with no money involved and you’ll know exactly what your obligations are to the car title loan company.

Just make sure you understand the terms of your loan and pay things back on time. Do that, and you should be just fine.

Brandon Jefferson used to find himself in financial trouble all the time. But then he got a plan—a very good plan. Now, he blogs about his former trials and gives people advice on how to handle similar situations.