Learn How to Avoid Defaulting on a Title Loan
Generally, people do not want to miss bill payments, but when circumstances change, it may be impossible to avoid. Maybe your landlord is increasing the rent, or you lost one of your primary sources of income and can no longer afford certain payments.
As an adult, chances are you will experience some financial hardship, and navigating them can be a challenge. If you apply for a car title loan online but default on it, you risk having your car repossessed by the lender.
However, this result is typically the last resort any lender wants to take. Contact the lender immediately if you have trouble paying your title loan bills. They may assist you in writing different terms or finding an alternative solution!
Learn more about what happens if you default on a title loan and how a title loan works precisely. You can start your inquiry for one today by visiting this website!
How Do Title Loans Work and Why Is Defaulting on One Bad?
Title loans allow a person to borrow money using the available equity in their car. This option is secured because there is a physical asset on the line as collateral in case a person doesn’t pay back their funding. If you obtain approval, lenders place a lien on the vehicle title and remove it after you finish paying off the money.
Traditional bank loans don’t use collateral during their agreements. That is why they are tougher to apply for if you do not have good credit to back you up! Instead, they run a credit check and use the applicant’s creditworthiness to determine if they are responsible enough for a loan. If your credit score is too low, it may indicate that you’re financially insecure, and they may not want to give you any funding.
Defaulting on a title loan occurs when a borrower fails to adhere to the terms agreed upon between them and the lender. Failure to pay on time, not paying the agreed amount, or doing something you’re not allowed to do can result in loan default.
Borrowers are typically contacted before a lender declares default on a loan to try to correct their mistake. During a title loan, the lender has the legal right to repossess your vehicle if you cannot resolve the issue.
What Happens if My Car Is Repossessed From a Title Loan?
Car repossession can vary depending on your circumstances and whichever state you reside in. If the lender decides to repossess the car, they must send a notice to the borrower beforehand explaining the situation and giving exact times and dates for this to occur. If repossession occurs, defaulting borrowers usually have a certain amount of time to repay their loans and get back their vehicles.
If you can’t pay the loan amount back in time, lenders will sell the car at auction to compensate for the lost profit. You may be entitled to that difference if your vehicle sells for more than the loan balance and the repossession fees. You may still owe the lenders this amount if it sells for less.
How Can I Avoid Defaulting on My Title Loan?
The best way to avoid defaulting on your title loan is by paying the amount back on time and following the terms! Late payments are the most common cause of a low credit score. Low credit scores can make life challenging for many reasons– they can affect approvals for loans, housing, and jobs.
Set up an automatic withdrawal from your bank account to never miss a title loan payment in the future! The money can instantly be withdrawn at the correct time each month, which means you’ll never worry about payments. This option can apply to any regular bill in your life!
Apply for Online Title Loans Today!
As a financially responsible adult, you should be aware of the consequences of defaulting on a title loan. While car repossession is typically the last resort any lender wants to take, it can still happen if you fail to pay back your money.
Contact your lender immediately if you’re struggling to pay the funding back! They may be able to help you work out new loan terms instead of jumping to car repossession.
Title loans can be excellent options for people who need money quickly but also have poor credit. If you need to access cash fast, you can easily apply for a title loan online or over the phone! It does not have to be a hassle to apply for the help you need.
