Hard Money Loans VS Title Loans Difference

There are many different loan types out there. Not all loans are made equal. For many, these types of loans can offer more flexibility than a standard bank loan.
For investors looking for the right kind of loan for their real estate investments, knowing the difference from title loans vs hard money loans can be eye opening.
We cover the main differences of hard money vs title loans below.

The Basics

Both hard money and title loans are asset based loans. Instead of using credit scores, Arizona hard money lenders determine the value of properties you own or are looking to buy as the producer of value.
A title loan is similar as they also use assets to determine a loan. THis can include vehicles, homes, and more. Title loans can also be used by real estate investors but most commonly they are used as quick payday loans.
Oftentimes these loans are confused with one another due to their similar asset-based loan terms.

Interest Rates
As these loans both use assets to determine the value of a loan, the interests rates are high for both.
Interest rates for title loans can be extremely high. Due to the nature of title loans, they want the most amount of money they can get as quickly as they can. The average title loan rate is 25% interest for the total loan amount. If you take more than a month to pay off, then it rolls over to the next month. These loans can be extremely hard to pay off if you don’t have the funds available.

Hard money loans are different because their interest rate sits at 10-16% . While this rate is still higher than traditional mortgages, this is because it is based on the repair value of a property. These loans also have longer terms than title loans. Hard money lenders in Phoenix are real estate investors themselves, so they know how to write loans that offer the best deals for their clients.

Payment Options
Title loans are usually set up for long term payments. Most are designed for one large payment to be made. For title loans is it best to have an exit plan in mind, or to refinance your title loan as quickly as possible.
Hard money loans are more flexible and have long term payment options. They work closely with investors offer payment options.

Loan Amounts
Title loans tend to be for smaller amounts, since they are usually based off the vehicle totals rather than a larger property.
With hard money loans since the value is based on the property or real estate, the loan amounts are so much larger. So before going to a title loan company, take some time to learn more about hard money loans, they may be a more affordable and practical option for your investments.

Summary
Hard Money loans and title loans vary in many different ways. While both asset-based loans, hard money loans are preferred for real estate investors.
The main differences of hard money loans vs title loans are;
1. Payment Options and Terms
2. Interest Rates
3. Loan Amounts
Have you used a hard money loan before?

About the Author: Catherine Way reports for Prime Plus Mortgages – Phoenix Hard Money Loans

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