Title loans can be a financing option to provide a person with financial relief during a difficult time. They can be great for people who don’t have much money in savings or struggle with poor credit scores. If you feel your options for accessing money are limited, auto title loans could be your answer!
The Basics Around Car Title Loan Repossession
On the other hand, entering into any financial agreement comes with risks that need to be considered before making decisions. If you’re interested in applying for a title loan, you must understand that lenders can repossess your car if you miss monthly payments. However, that is the last resort for most lenders to satisfy the debt, as it is costly to do so. Most lenders would rather find an alternative solution.
The details surrounding repossession laws in America differ depending on your state. Some states require lenders to give exact information about when the repossession will occur; others may allow borrowers time to get their car back before it’s resold. Check with the laws in your state to find out how you’re protected!
The only sure way to completely avoid repossession during a title loan agreement is by paying back your loan on time. However, there are specific steps you can take to ensure this doesn’t happen, and below are some examples.
Why Can My Car Be Repossessed During a Title Loan?
A car title loan is also called a ‘secured loan’ because the title is used as collateral in exchange for funding. Instead of looking at just your credit history, title loan lenders care more about your vehicle’s value and if you have a steady income to pay the money back. Traditional banks often deal with ‘unsecured loans,’ which means they don’t use physical collateral in exchange for funding.
With an unsecured loan, lenders will typically look at a person’s financial history, like a credit score, when deciding if they should be lent money. This is why getting approved can be so challenging when you have bad credit and why title loans could be a better option for people from many different backgrounds!
If you don’t pay off your title loan within the agreed time, the lender can repossess your vehicle and resell it to pay themselves back.
Ways to Avoid Title Loan Repossession
If you don’t pay your loan back, you technically violate the terms of your agreement, which gives lenders the legal right to take possession of your vehicle. Not paying your bills on time has more consequences than repossession– it can negatively impact your credit score! This can make many aspects of your life more difficult. Below are ways you can avoid title loan repossession:
Pay Your Title Loan Back on Time
Indeed, the simplest solution is often correct– the best way to avoid title loan car repossession is by making timely payments. Make sure the funds are available in your account and track when they’re due.
A foolproof way to ensure you never miss a payment is by setting up automatic withdrawals from your bank account! Instead of remembering specific dates every month, the money will be taken automatically, which means you will never miss a bill again. This could help with many payments in your life outside of title loan ones!
Talk to the Lender Directly
Life is unpredictable, and financial circumstances can change at a moment’s notice. If you struggle with title loan payments, you should contact the lender directly and explain what’s happening.
Car repossession is the last resort that any lender wants to take. If you communicate honestly about your situation, you could potentially develop new agreement terms that are better suited for your needs. They may also offer lower interest rates or agree to lower payments over an extended period.
Avoiding the problem will lead to car repossession, but talking about it could open things up for renegotiation! It’s worth it to give it a shot.
Title Loans Can Be Simple and Quick Financing Options
As mentioned earlier, car repossession is not the first choice any lender wants to make during a title loan agreement. However, if you miss your monthly payments, you put your property at risk.
The easiest way to avoid repossession if you have a title loan is by paying the money back on time. You can set up automatic withdrawals from your bank account to ensure you never miss a due bill or contact the lender directly to explain why you can’t afford the payments. They may help you renegotiate the terms. If you need money quickly, a title loan could be the answer!
How To Qualify for an Online Title Loan
Title loans can be a great financial resource to consider when you need to get back on your feet. If you have read the risks of title loan repossession and feel confident enough to apply for one, great!
However, they are not available in every state. If you want to qualify for an online title loan, the first step is to make sure you can apply for a car title loan in your state of residency.
The next step to qualifying for an online title loan is to see if you can meet the initial requirements! Luckily, car title loans have relatively straightforward requirements that are simple to understand. While these exact requirements may vary from state to state, you can expect these requirements regardless of the state you are applying from:
Age Requirement
Applying for a car title loan is a huge financial commitment! Repossession is a potential risk, so you must be of age to apply for one. For a title loan, that means you are at least 18 years of age or older.
Vehicle Requirement
Since your vehicle title is the collateral for the loan, the car must have a certain amount of equity to borrow from. Equity is simply the difference between the market value of the vehicle and what is currently owed on it if anything.
A qualifying vehicle is one that has enough equity- and the title must be in your name at the time of inquiry. If it is not because you are currently financing your vehicle, you will need to see if your title loan lender is willing to pay off the remainder of your auto loan. Then, that remainder will be added to your total title loan balance to pay off.
Income Requirement
You will need to show proof that you can afford to repay the title loan! That is another way to make sure you avoid title loan repossession. You have to provide proof of income or alternative income. You don’t need a 9-5 job necessarily, but you will need some form of proof that you can make a title loan payment each month.
And it can be that simple to initially qualify for a car title loan! Finding out if you meet these requirements can be a breeze.
