Title loans can be a great way to get more financial flexibility when you have unforeseen emergencies, but can a title loan take your car away? Just as with collateral on any loan, if you default your car could potentially be repossessed. If you’ve chosen a reputable lender for your title loan, however, there is usually a multitude of ways to ensure that you don’t default on your payments. While good lenders will usually work with you when they are able if you’re having trouble making payments, borrowers who don’t pay back their loan at all may end up defaulting and find their vehicle at risk of repossession.
In a car title loan, if the borrower fails to pay back the loan, the lender may have the option to repossess the vehicle and auction it to pay for the outstanding principal owed on the loan. The process for repossession is a little different in each state. Many states have “right to cure” policies, which require a lender to send a notice of their intentions to repossess, after which the borrower has a set number of days to clear the debt before repossession can occur. Other states have entirely different systems governing the process of title loan repossession, but most require that the lender make some sort of formal declaration of their intention to repossess in advance. Make sure to be aware of the laws in your own state.
After a vehicle is repossessed, it will often be taken to an auto auction to recoup the lenders’ losses from the loan. Again, this is a process that varies greatly by state. Some states will require that once your car is sold, any money beyond the amount of the debt will be returned to you, but many allow the lender to keep any differences between the money you owe and your car’s value. Some states may even allow a lender to auction your vehicle and still come after you for even more if the price the car sold at didn’t cover your loan.
For any loan, the prospect of defaulting can be scary. When you take a loan, you accept the responsibility to pay back your lender on time. Lenders rely on these repayments, so there does need to be some way for them to recoup losses from people who just refuse to live up to their end of the bargain. While car title loan repossession may seem harsh, it’s a tool that most lenders only use when there are no other options.
Reputable car title lenders want to maintain their reputation of quality business practices, and all the paperwork and labor that goes with repossessing vehicle and selling it at auction gradually deplete the money that they would recoup from doing so. Lenders don’t want to repossess anybody’s vehicle, but often recovering unpaid loans is a wasteful but necessary part of business for them.
Like any other service business, quality lenders want to take care of those that borrow through them. Providing quality service over and over builds the trust that is necessary for any financial lender to have with their borrowers. When you are at risk of getting behind on your payments, your lender will probably have options available to set up payment plans or help you organize a way to prevent defaulting. Defaulting on a loan can result in costly fees and hits to your credit score even if repossession never happens, so if you get close to default, or get a right to cure notice, communicate with your lender right away about how you can resolve the situation.
The repossession of vehicles to cover car title loans usually creates a lot of extra work for a lender and can be devastating for a borrower, so it’s usually used only as a last resort. Sadly, repossessions do happen from time to time, but there are typically ways to work out a solution for any borrower who makes an effort. When a lender is unable to even contact a borrower to try to work on a solution is often when they will be forced to repossess.
You typically still have options if your car is repossessed. Again, repossession is typically a departure from normal business for most lenders, and so they would love to resolve the issue before investing more effort and resources into auctioning your car. Once your car is repossessed, you may actually owe more than you did due to the expense of a repo agent and legal fees. Even if it gets to that point though, an established lender will usually be ready to work something out that’s acceptable to both of you.
Often you will be able to pay your past due amounts and any fees associated with the repossession to regain your vehicle. This will mean that you still owe future payments, but that you essentially get to reset to before the repossession. You could also pay your loan in full plus any fees and regain your title. Then, you will likely need to go get your car from a tow yard with the help of a notary. Unfortunately, once your car has been repossessed there won’t be many ways to get it back that don’t involve paying up. This is why quick communication about any lapses in your payments is essential before you default on a loan.
Borrowing can be crucial to making life goals happen over time or getting out of a sticky financial spot, but finance is serious business, and you always want to borrow responsibly to protect your future. Before jumping into any loan, you should read all the terms and understand the payment schedule. If you have any questions, ask them before you finalize the loan.
Since repossession of your car can be crippling to your earning power and quality of life, you need to be sure to choose a reputable lender with a long history of quality service to borrowers over the years. When the unexpected delays a loan payment, you want to be working with a quality organization that will find a productive solution that helps keep your head above water.
Here at TFC Title Loans, we have over 20 years of experience in providing title loans in any state they exist. We’ve built our reputation over time by providing fair interest rates and sustainable repayment schedules. We know that lenders and borrowers are partners in a loan, and working together is in everyone’s best interest. Apply online today for a secured title loan, and see how much cash you could get today for your title.