Is Car Repossession Usually the Last Resort for Lenders?
Obtaining a car title loan when you need money can be a quick solution for many people. However, there are risks associated with all financial agreements that people should know before they sign anything. With any secured loan option, lenders have the legal right to repossess the physical collateral used for funding.
Most people apply for a title loan because they need help paying for an unexpected cost. Experiencing financial difficulties is common among adults, but it can be challenging to navigate. Title loans can offer relief during a hard time, but that relief can become more stressful if you don’t pay your loan back promptly.
If you are interested in applying for a title loan but are worried about car repossession, there are steps you can take to avoid this! Below are helpful tips for stopping a vehicle repossession from happening when you have an auto title loan.
Why Can Title Loans Cause Repossession?
Before you can understand how to avoid vehicle repossession, it’s best to learn how title loans work precisely. Title loans are secured options that allow a person to use the available equity in their vehicle in exchange for funding. Lenders place a lien on the car title to access the money and remove it once it is repaid.
Car title loans can be great options for people with bad credit scores because their history isn’t the main focus of approval. Lenders will run a credit check, but they care more about your car’s equity and if you have the income to pay the loan back.
Federal law requires lenders to check for income before approving borrowers for loans. This regulation prevents predatory lending practices from taking place!
When Can Lenders Repossess a Vehicle?
If you fail to pay your loan back, lenders can legally repossess the vehicle after a certain time. The laws surrounding title loan repossession can vary depending on your state. In most states, lenders must warn a person before taking their vehicle away, giving them time to organize a time or place.
Title loans are considered short-term loans, which means the repayment periods are not very long. If a borrower misses even one payment, lenders may begin the process of repossession.
What Happens if Lenders Want to Repossess My Vehicle?
If you fail to pay back your title loan funds and you’re receiving notice from the lenders about repossession, the best thing you can do is attempt to pay the money back before it occurs. Paying back the funds is the only way to stop lenders from taking your vehicle.
After repossessing a car, borrowers still have time to gather the money and get their vehicle back before lenders resell it for profit. The amount of time can vary depending on your state, but it is typically around 30 days. Lenders can sell the car if you fail to pay the money back after repossession.
How Can I Prevent Car Repossession From a Title Loan?
The best way to stop repossession is to prevent it from happening in the first place. If you’re struggling with your title loan payments, contact the lenders immediately about your circumstances. Car repossession is the last resort they want to take, and they may help you work out new terms to pay the money back. You may have the opportunity to refinance the title loan, giving you more time to return the cash.
Additionally, you can set up an automatic withdrawal from your bank account. This system ensures that you get all the bill payments on time! Instead of having to remember dates, the money can be automatically withdrawn on the correct day, which means you will never miss another bill.
Finally, the best way to prevent car repossession during a title loan is to be conscious of how much money you are borrowing. If you take out more than you need and struggle to make monthly payments, the interest rates can roll over, causing more debt to pile up.
Apply for Auto Title Loans Today!
Car repossession from a title loan may sound scary, but it only happens when people miss payments and avoid contacting their lender. Auto title loans can be useful options for people with bad credit who need to access money quickly! Start your inquiry today by filling out this pre-approval form or calling to speak with a title loan agent.