Car Title Loan Repossession

Many people face tough financial situations, and they often need to borrow extra funds to overcome their challenges. While credit cards and borrowing money from a friend or family member are sometimes available solutions, others look at the equity in their vehicles as a source of cash. A car title loan is designed to give vehicle owners access to several hundred or even thousands of dollars in some cases with a fast loan process. They typically have minimal credit or income requirements, and the main requirement is that you have equity in your car. Some title loans can deliver funds into your bank account within a few days or less. When you are in a critical situation with your finances, you may not think about how to get out of a title loan. Instead, you may simply be grateful that you have access to funds at the present time. However, car title loans are typically short term loans, and many are due in full with interest charges within 30 days or less.

What Happens When You Don't Pay a Title Loan?

Many people who have used car title loans often fail to read the fine print on their title loan rules and regulations. They may not realize that the due date is within a few weeks, or they may not think ahead about planning for the repayment of the funds. The unfortunate reality is that many people who take out a car title loan default on it. In many cases, the lender will roll over the loan for another month. In fact, the average borrower for car title loans rolls over their account eight times before the loan is either repaid or the lender repossesses the car. Because your car is used as collateral with a car title loan, the lender has the ability to repossess the car as soon as you default on it. They are not obligated to roll the loan over for you, but many will do so for at least a couple of months.

How Can You Prevent a Title Loan Repossession?

The best idea is to only take out a car title loan if you know for certain that you will be able to repay the loan balance in full by the first due date. After all, you may depend on your car, and you do not want to put it at risk. You also may not want to incur additional interest charges and fees if the loan rolls over a few times. However, many people take out a car title loan without having a repayment plan. If you are included in this group, you may want to know how to get out of a title loan. You have a few general options available. You can repay the loan in full, sell your car or have it repossessed. To repay the loan in full, you may be able to use a credit card with an available credit line. You may also be able to apply for a personal loan or even a traditional car loan with a longer term. In some cases, a friend or family member may assist you by providing you with a loan. You could attempt to roll over your car loan and tighten your budget to save money for the repayment. Each month that you rollover the loan, however, you risk a possible title loan repossession. When paying off the loan is not an option, you can also consider selling the car. In many cases, you can sell the car for more than the loan balance. After all, car title lenders typically only lend up to 40 percent of the vehicle's value. With the proceeds from the sale of the car, you can pay off the title loan and may have extra money available to use as a down payment on a new car.

What Happens If Your Car Is Repossessed?

All of these options will help you to avoid a title loan repossession. Keep in mind that a vehicle repossession will strip you of your car without notice. You may be heading out the door to work one day and discover that your car is not available as needed. Any equity that you had in the vehicle will be gone. In addition, a repossession is a negative event on your credit rating that may remain in place for seven years or longer. This can make it very difficult for you to obtain financing in the future, including if you need to apply for a new car loan. As you can see, it is best to act quickly to deal with your car title loan before a repossession occurs.

How Long Until Your Car is Repossessed?

If you have a car title loan that you cannot repay, you may be wondering how long before title loan repossession occurs. Title loan regulations permit the title lender to repossess the car as soon as you default. Keep in mind that you must repay the entire loan balance to avoid foreclosure. You could potentially repay most of the loan, but the lender could repossess the car if you default on any portion of the amount due. If you are facing a pending due date, it is best to plan the rollover with your lender as soon as possible or to develop a plan for repayment. If you choose to rollover the loan to buy additional time, only do so if you believe you can develop a plan for repayment or can sell the car before the next rollover period. Remember that each rollover will cost additional money and increases your risk of a repossession.

What Can You Do If Your Car Is Repossessed?

If you have never had a vehicle repossessed, you may not know what to expect. The lender will not schedule a repossession date. Instead, they will contract with a third party to collect the vehicle. This may be from your work or home, and it may be at any hour of the day. The third party representative will not knock on your door or notify you of the repossession. Instead, they will simply tow your vehicle away. Upon discovering that your vehicle has been repossessed, you have the option to attempt repayment to the lender before the vehicle goes to auction. This is not always successful, and you will need to have access to the full amount of funds available to pay off the loan and all fees in order to proceed with this option. In most cases, a repossession means that you are instantly without a car, and you will need to make other transportation arrangements. You also should be prepared to deal with the fact that your credit rating will plummet as a result of the foreclosure.

While a car title loan can be a source of almost immediate cash with for those who have equity in their vehicles, it also can create a nightmarish situation in the weeks and months to come. If you are thinking about applying for a car title loan or if you have already applied, it is important that you develop a repayment plan for dealing with the loan repayment. Carefully examine all of your options today, and make an effort to repay the loan as soon as possible to avoid a repossession.