Can You Go to Jail For Not Paying a Title Loan?

Daniel Joelson

Daniel Joelson

Total Posts: 583

Published Date: December 22, 2021

Daniel Joelson has been in the consumer finance space since 1994, he has helped to develop underwriting manuals for the financial sector. With a vast amount of Knowledge in consumer finance, he has been writing articles for all types of loans. With his knowledge, he is able to help many people to answer different financial problems.

Go To Jail For Not Paying Your Title Loan?

Wondering if you can go to jail over a title loan? Generally, you cannot be imprisoned for defaulting on a title loan. However, there are possible long-term financial implications for failing to pay.

Once in a while, you may have an urgent need for cash. It may be due to an emergency family situation, a pending loan installment that might affect your credit score significantly, etc. For instance, it could be you had some major plans, like going on holiday or paying school fees, and your finances have gotten held for one reason or another. A title loan comes in handy on such occasions, offering a means to access quick and easy cash, regardless of your credit rating.

What Is Title Loans?

Title loans are secured financing that you can take against your vehicle. It’s usually a convenient financing solution whenever you need cash urgently. A title loan enables you to borrow against your car’s unattached value up to a certain percentage and payback in monthly installments. As the lender can repossess and sell the vehicle if you fail to pay, your credit score doesn’t affect their lending decision.

A title loan is also termed a pink slip loan. This is because the borrower surrenders the vehicle’s title (pink slip) to a financier in exchange for funds. The lender (lienholder) then adds their name to the title but allows you to continue using the vehicle.

How Does a Title Loan Work?

Usually, when you want to acquire a title loan, you visit a lender either at their physical office or on their website if they offer the loans online. The financier will require you to provide details of the collateral you’re providing (your vehicle) alongside other relevant loan application information. These may include your personal information, proof of residence documents, identification documents, references, proof of income documents, etc. However, the main interest is the vehicle details and the title. They will then do calculations to establish the vehicle’s equity value and communicate the fundable limit.

Upon submitting all the required documents, you can get the loan immediately. Different financiers have varying lending timelines. For instance, we disburse the funds in as little as 24 hours.

Ideally, title loans are suitable for people who need emergency funds, possess limited or no assets other than their vehicle, or have been turned down by other lenders due to poor credit ratings. Note that title loans aren’t restricted to car collateral. You can get a title loan against your motorcycle, truck, or even recreational vehicle (RV).

Like with other loans, it’s essential to choose your lender wisely. A reputable lender may be able to offer you favorable terms and provide repayment flexibility that does not strain you financially. Essentially, we offer a longer repayment duration, even up to 36 months, and you can borrow up to 85% of the vehicle value.

What Happens If You Default On a Car Title Loan?

If you default on your car/vehicle title loan, there are several possible consequences. The worst is that it puts your car at the risk of repossession. However, it doesn’t have to get to this. You can talk to the lender in advance and explain your situation to them. A reputable lender might offer a flexible repayment schedule that favors your current financial situation.

In case you fail to communicate your situation, the lender will send you a repossession notice, which in most cases may be about 30 days. However, if you go mute on the lender and are unreachable, they may shorten the repossession notice period by half.

During the notice period, you can make payments or reach an agreement and stop the repossession. But note that you still require to pay penalties for late repayment, alongside the regular installment.

Once the notice lapses, the lender will auction the vehicle to recover their money. Rarely do auctions raise the exact vehicle value? The car can be bought at a lower or higher value. Where the auction results in a shortfall, the lender will require you to pay up the difference. But if the vehicle sells over its value, you should demand the difference, which will be net of relevant sale costs.

If you find cash in the nick of time, you can walk to the auction grounds and redeem your vehicle. Nonetheless, even if you’re unable to buy the car, you should insist that it could sell at a fair market price.

How Can I Avoid Losing My Car?

As earlier mentioned, you should maintain open communication with your lender whenever you experience difficulties repaying your title loan. This way, you can agree on a flexible repayment plan and avoid the repossession process altogether.

Repossession is harmful in many ways. For example, if the car was your primary means of transport, then the impact can be significant. Again, it’s not good for your credit. Once the vehicle is repossessed, it reflects on the credit report and may stay for seven years. And don’t forget the added costs – penalties, sale costs, etc., that you’ll have to pay in addition to the principal amount and interest.

All these can avoid by addressing the problem early. Once you hit a rough patch financially and it becomes apparent you won’t service the loan on time; you can approach your lender for refinancing. You can also do some legwork and research on financiers who may be offering better terms and inquire whether they can do a buyout.

Whichever option you choose, request a repayment plan that fits your financial situation, so you can keep up with the repayments as they fall due.


As much as you cannot go to jail over a title loan, default has a load of negative consequences. For example, interrupted transportation, negative credit, and additional costs are all negative occurrences that follow default on a title loan. Hence, it’s essential to avoid getting into this situation by communicating with your lender early whenever you’re having repayment challenges. Alternatively, you can arrange for refinancing and get a new, more flexible facility.

If you have been wondering what happens if you default on a car title loan, we hope this article has provided sufficient answers. All the same, if you need a title loan or have one already and would like to refinance it through a buyout, contact us today and get approved in minutes!

This article was brought to you by TFC Title Loans, we try to bring to you the most informative information. If you are interested in getting a title loan near me, we are able to help you with our large referral network.

All of our referral partners are in compliance with the CFPB.

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DISCLAIMER: As our policy to make sure you know what we do and what are our limitations, we offer you these disclaimers. We are NOT A LENDER and we do not make short term cash loans or credit decisions. We are a referral service and work only with licensed lenders/brokers.

We may act as the broker for the loan and may not be the direct lender. Loan proceeds are intended primarily for personal, family and household purposes. We do not offer or service student loans.

*Loan amounts by the lenders vary based on your vehicle and your ability to repay the loan.

*Since we do not lend money directly we cannot offer you a solicitation for a loan, except in the state of California. In all other serviced states we WILL match you with a lender based on the information you provide on this website. We will not charge you for this service and our service is not available in all states. States that are serviced by this Web Site may change from time to time and without notice. Personal Unsecured Loans and Auto Title Loans are not available in all states and all areas.

*Auto Title Loan companies typically do not have pre-payment penalties, but we cannot guarantee that every lender meets this standard. Small Business Loans typically do have pre-payment penalties and occasionally will use your car as collateral to secure the loan.

*All lenders are responsible for their own interest rates and payment terms. TFC Title Loans has no control over these rates or payments. Use of the work competitive or reasonable does not mean affordable and borrowers should use their own discretion when working directly with the lender.

*The amount of people who applied for a loan and we helped and those who received a loan is not the same. We cannot guarantee we will find a lender who will fund you.Just because you give us information on this web site, in no way do we guarantee you will be approved for a car title loan or any other type of loan. Not all lenders can provide loan amounts you may see on this web site because loan amounts are limited by state law and/or the lender. Some lenders may require you to use a GPS locator device on your car, active all the time. They may or may not pay for this or charge you for this. This is up to the lender and we have no control over this policy of the lender. Typically larger loans or higher risk loans use a GPS.

*In some circumstances faxing may be required. Use of your cell phone to receive updates is optional.

*Car Title Loans are expensive and you may have other ways to get funding that is less expensive. These types of loans are meant to provide you with short term financing to solve immediate cash needs and should not be considered a long term solution. Residents of some states may not be eligible for a loan. Rejections for loans are not disclosed to our firm and you may want to contact the lender directly.

*Car Title Loan lenders are usually licensed by the State in which you reside. You should consult directly with these regulatory agencies to make sure your lender is licensed and in compliance. These agencies are there to protect you and we advise making sure any lender you receive money from is fully licensed.

*Trading Financial Credit, LLC dba TFC Title Loans, Car Title Loans California, Dineromax. If you are using a screen reader and are having problems using this website, please give us a call at 1-844-242-3543 for immediate assistance.

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