The Basics

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Payday and auto title loans are high cost, small-dollar loans. They are offered to individuals without a credit check and little consideration of their ability to repay.

Payday loans are secured by access to a borrower’s bank account via a post-dated check or electronic ACH authorization. The initial term is typically two weeks to one month, with the term usually determined based on the borrower’s pay cycle. Auto title loans are secured by a car title; the amount loaned is based on the value of the car and they have terms of thirty days. They are both marketed on the basis of speed and convenience to people who may feel they have no other options.