How to Get Out of a Title Loan
Car title loans are designed to be provide consumers with a fast and easy source of cash. While they may provide beneficial cash when urgently needed, they are expensive and difficult to pay off. They use your vehicle as collateral, so you typically need to have a significant amount of equity available in the car before you apply. Generally, you will receive a rather high interest rate and a very short term with a car title loan. If you fail to pay the loan back in full by the agreed upon date, your vehicle may be repossessed. With this in mind, you may be wondering how to get out of a car title loan in the fastest and most affordable way possible. You have a few options available, and a closer review of these options will help you to identify the best options for your current situation.
Understand Your Rights
Many consumers are aware of the right of rescission related to vehicle financing. This right essentially provides you with the ability to back out of financing within a specified period of time after taking on the debt. The rescission period is often two to three days. When you purchase a new car, for example, you may simply drive the car back to dealership and state that you want to return the car within a day or two of purchasing it. With a car title loan, this is unfortunately not an option. The right of rescission does not apply to a car title loan. If you want to know how to get out of a car title loan, you may need to think more creatively to find the solution that works well with your financial situation.
Perhaps the easiest way to proceed when you want to know how to get out of a car title loan is to pay the loan off with cash. Hopefully, you have this money readily available in a savings account. Most car title loans are only a few hundred dollars or slightly more, and many people have this cash in a savings account. If not, you may need to pull it out of a retirement account. While you will have to take a financial hit by paying the early withdrawal fee as well as taxes on the funds you withdraw, this may be a better option than having the car repossessed or than having to pay high interest charges on the car loan. Carefully compare this option against other options to determine if this is the most affordable solution available to you.
Apply for a Long-Term Car Loan
Car title loans are popular because they provide you with an almost instant source of cash. Many of these loans are funded within days of submitting the application, and some are funded within hours. An alternative to car title loans is a traditional auto loan. These are loans from your primary bank or other financial institution that generally have very competitive rates as well as a term length of several years. This can make it much easier and more affordable to repay the borrowed funds. The loan process is often only a few days, providing you with a fast financial solution. However, you generally need to have good credit to qualify. In addition, you may need to have a late model vehicle. Many lenders will not lend on an older vehicle. When you want to know how to get out of a car title loan, this is a feasible solution for many to consider. However, because it requires good credit and a newer car, it is not ideal for all situations.
Apply for a Personal Loan
Another idea is to apply for a personal loan. Personal loans can be secured or unsecured, and they are typically available from a local, regional or national bank. If you apply for a secured loan, you can use another asset you own as collateral to qualify for very competitive rates, such as a boat or another car. If you have collateral, you may not need as high of a credit rating to qualify. If you do not have collateral, you typically need to have a higher credit rating and may receive a higher interest rate as well to qualify for an unsecured loan. Because personal loans usually have a term length of at least five to seven years, they provide you with a great way to refinance your car title loan debt. You may also be able to roll other debts into the loan for further benefits.
Use a Credit Card Cash Advance
Many car title loans are only a few thousand dollars or less in loan amount. If you have a credit card with a high available credit limit, you may be able to get a cash advance from your credit card. Many credit cards have a high interest rate charged on cash advances, and they also have a dollar limit on the amount of cash you can access. Credit cards generally have a revolving loan term, and this can make it more difficult to pay the debt off. However, using an existing credit card to refinance the debt is a great idea if you have a bad credit score and cannot qualify for a new card. In addition, some credit card companies have new offers available for those with lower credit scores, so you may still qualify for a new credit card if you have a lower credit rating. If you plan to apply for a new account, research the cash advance terms before you apply. You want to ensure that the credit card will meet all of your needs.
Apply for a Home Refinance Loan
If you have equity in your house, another idea is to apply for a refinance loan or a home equity loan. This can provide you with a very low rate, a long term and a substantial amount of money. However, you may need to have decent credit scores and equity established in your home to qualify. More than that, the loan process can take 30 days or longer, and this may not be ideal if you need to know how to get out of a car title loan quickly. On the other hand, because you can qualify for a larger loan amount, this is a great way to consolidate your car debt with other debts. Debt consolidation can lower your total monthly debt payments and help you to regain control of a serious debt situation.
Cash in Your Whole Life Insurance Policy
It is easy to overlook your whole life insurance policy when thinking about your cash assets, but this is a wonderful resource to turn to when you need cash. A whole life insurance policy offers death benefits similar to a term life insurance policy. However, the premium is higher, and this is because a portion of the premium is set aside in an interest-bearing account for you. Over time, this balance grows. If you have had a whole life insurance policy for more than a few years, you may be able to tap into its cash value. Some policies are set up so that you can borrow the funds and repay the money at your convenience. Others will require you to terminate the policy to obtain the cash funds. Loans on whole life insurance policies are typically issued immediately without an application or credit check, making this a great option if you need money and have a low credit rating.
Borrow Money From a Friend
The last thing most people want to do is to ask a friend or family member for financial help. It can be embarrassing and humbling to do so. However, everyone falls onto hard times at some point, and borrowing money from a friend or family member may be your only option. For example, you may have a lower credit rating and no other feasible financial option for obtaining money. If you decide to ask a friend or family member for a loan, choose the individual with care. Keep in mind that many others may also be facing hard financial times, and you cannot always tell who is dealing with money issues at first glance. In addition, if the friend or family member agrees, setup strict repayment terms and offer to pay interest on the loan.
Sell the Car
When you ask how to get out of a car loan, you can see that there are many options available to consider. However, each has its own nuances and requirements. You may be in a rare but unfortunate position of not having any of the options listed above available to you for various reasons. If this is the case, you can choose to continue to pay on your car title loan as agreed. If you cannot make the title loan payments and face the risk of having the vehicle repossessed, consider selling it instead. It is not ideal to sell a car that you desperately need for transportation. However, the car will be taken from you if you do not pay off the loan, and a repossession can seriously damage your credit score. In addition, if you sell it on your own, you may even be able to get a little money back from this process.
A car title loan may have served a valuable purpose for you by providing you with a fast source of cash when you needed it. However, some people find themselves in a desperate position of being unable to pay the money back to the lender, and they may have their vehicle repossessed as a result. If you are facing this type of situation, you must carefully explore all options available to determine the best course of action. While many will have no other option but to sell the car, others may have multiple options available to them. By thoroughly comparing the options available, you can best determine how to get out of a car title loan without delay.