Need to Borrow Money? Here Are Your Best and Worst Options

Car title loans: These are short-term loans that — as the name suggests — use your car as collateral. The amount you can borrow is based on the vehicle’s value, and the lender will take your car if you don’t repay them in a timely manner, so the risk is high. Interest rates and fees are often exorbitant — the FTC warns that you can expect a triple-digit APR — and you may be required to pay for costly add-ons like a roadside assistance plan. Despite their high costs, people turn to car title loans if they have no credit cards and cannot get approved for conventional loans.

Payday loans: These are secured by personal checks or bank accounts. The borrower writes a post-dated check or provides their bank account information to the lender in exchange for a short-term loan. The check is for the amount of the loan, plus a fee. The lender gives you money immediately and agrees not to cash the check until your next payday, when you will, in theory, have the cash to cover it. The annual percentage rates (APR) on such loans can be more than 300%, so they’re a terrible option used most often by people with no other access to credit.

Whenever you borrow money, no matter what approach you take, you pay for the privilege. Sometimes, borrowing is unavoidable, especially if you experience an emergency or need to make a big purchase.