There are many ways to get cash fast when you need funds for unexpected expenses, and it can be difficult choosing the best option for your situation. If you're trying to decide whether to take out a personal loan or apply for a title loan, here are two points you want to keep in mind.

One Requires Credit and One Doesn't

The state of your credit report is a big factor in which loan type is right for you. Personal loans require applicants have somewhat decent credit whereas people with bad or no credit can get approved as long as they have the right collateral. However, banks that offer personal loans report customers' payment history to the major credit bureaus, which can help people improve their scores as long as they pay on time every month. Title loans generally only report to the credit bureaus when customers default.

Another thing to consider is that personal loans tend to have lower interest rates than title loans but this too depends on how good your score is. The higher your score, the better rate you'll get, which can save you money over the life of the loan.

On the other hand, because the loan limit is tied to the vehicle's equity, it's possible you'll get approved for a larger amount with a title loan than you would applying for a personal loan with so-so credit. It's essential you consider all the factors affecting your situation, compare them to the pros and cons of each loan type, and choose the one that best matches your needs.

One Requires Collateral and One Doesn't

To be approved for a title loan, you must provide collateral in the form of a vehicle you own free and clear. The title loan company will require you to add them as a lien holder to the vehicle's title. Although you are still able to use the car or truck, the company will take possession of your vehicle if you default on the note. This can be problematic if you depend on your vehicle to get around, so it's essential you carefully consider whether you really can afford the risk.

In comparison, personal loans are considered unsecured debt, meaning you don't have to give the bank anything except your signature to get the money. This is why banks are so interested in your credit score. They want to see how likely it is you'll pay the money before they'll take a chance on you. If you default on the loan, though, the most that will usually happen is you'll earn a black mark on your credit report that will stay on for at least 7 years.

For more information about personal loans or to see how much you can get approved, contact a local personal loan lender.