What happens if I don’t pay a Title Loan back?
A Title Loan may seem like a good option if you find yourself in a difficult life situation and urgently need funding. However, you should understand that this type of financing is quite risky and can even lead to the loss of a car in an emergency.
In fact, defaulting on an auto Title Loan is quite expensive. Moreover, it can also prevent you from obtaining a loan in the future. If you are thinking “I can’t pay my Title Loan” then there There are several options that can help you get rid of this loan and the easiest one is to pay off the debt. You can also talk with your lender and work out new payment rules.
What happens when you default on a Title Loan?
What is meant by “default in a Title Loan” may vary depending on the lender and the laws of your state. As a rule, a default is a situation when you have not made a certain number of payments (or even one) and have violated the contract. Thus, already at this stage, the lender can begin the repossession procedure.
If you think that you will not be able to repay the loan on time, then you need to urgently contact your provider's customer service team. You may be asked to renew your loan or develop a new repayment plan. So what happens when you default on a car Title Loan where your title is held as collateral?
Of course, if you cannot repay the Title Loan, then you will have to face a number of unpleasant consequences, which may lead to the fact that you will not be able to receive a favorable loan offer in the future.
The first thing that awaits you is fees. The amount you pay for a late payment or repossession will depend on the laws of your state. What's more, some states place a cap on how much creditors can charge for late payments.
Also note that if your vehicle is repossessed, lenders will be able to charge you attorney fees, storage and other costs that are associated with the return of ownership.
Also, as already said, you may encounter repossession. Since you have used the title of the car as collateral, defaulting often results in a repossession and sale of your car so that the lender can consolidate the loan debt.
What can I do if I default on Title Loan?
Of course, the first thing you should consider is the most logical option - repay the loan in full before the lender sells your car. However, remember that if you cannot pay off the debt then the lender has the legal right to take and sell your car in order to consolidate the loan debt.
After your car is sold, you are entitled to receive the money left over after your debts have been paid (depending on where you live). However, you should also pay attention to the fact that if your car is sold for less than you should, then you will have to make up for the difference in some states.
How can I get out of a Title Loan?
You probably know that there are several options that can help you deal with your Title Loan before your vehicle is sold.
The first, and perhaps the easiest and most obvious option that you can use is to fully repay the loan. Even if you are faced with a difficult life situation, you can borrow money from friends and family and also ask for an advance payment at work in order to fully pay off the loan debt and keep your car.
Another option that you can use is to negotiate with your lender. Explain to the lender the situation you are in and most likely he will be able to lower interest rates so that you can repay the loan.