Getting out of a car title loan can be difficult. But what’s even more difficult than that is not being prepared and finding yourself in a scenario where your title loan company is taking your vehicle because of lack of payment. Or worse than that, a situation where they are selling your car at auction because you never got back to current. That’s why you need to take the initiative and be aggressive if you feel you need to legally get out of a title loan.
There are ways to get around these lending hassles and retain possession of your car without having to pay the entire amount due on the loan as listed on your contract. Let’s break down the handful of options you have if you need to get out of a title loan contract.
In nearly every state you have the right to pay off an overdue title loan by paying only the interest accrued since the last payment due date; this is called “rolling over” or “renewing” your loan and it often rolls over into another term (a new period of time that begins when you first took out your original title loan). This is how most people end up trapped in their fees because they don’t understand what rolling your loan over means and they simply want to get out of a title loan or registration loan, but don’t understand the process.
Another benefit of knowing your state’s laws is that you can counter your lender if they take your vehicle. You have certain rights as a borrower in most states when it comes to a title loan repossession and you can take legal action if they don’t follow the rules.
This is the most ideal situation, but also unlikely for most people that took out a loan in the first place. If you have the means to pay off your loan in full then you should do so. However, if you don’t have the means to get out of an auto title loan by paying upfront then it really doesn’t matter how much money you put down or even if your lender charges an early payoff fee. Again, most borrowers cant make early payments or pay their loan off in full but you should do everything in your power to get out of your financial obligation early.
If you don’t have the money to pay off your lender in full but want to avoid having them repossess your car, the next best thing is to roll over or renew your loan. A lot of people apply for a title loan with no job or even a source of income and that causes problems later in the loan term. A loan rollover can beneficial because it allows you more time to come up with the amount owed plus interest. What’s even better is that most states allow borrowers to extend their original maturity date (the date on which the principal was due) when they renew, extending your payoff date.
A loan rollover may not be applicable in every situation for a car title loan as it’s mostly used for payday loans and cash advances. But some states will allow a title loan rollover and it’s a viable solution if you’re facing default.
Selling your car sounds like the best scenario as you may be able to get more money than what you’re vehicle is worth. But you will also need to deal with the fact that the lender has your car title and that will definitely complicate the sale. Most states make it easy to transfer a valid title from one owner to another, but you still have to deal and negotiate with three parties to complete the sale. If you go this route then be sure to investigate how to legally sell your vehicle without a title.
Most lenders are understanding and will work with borrowers to resolve any kind of financial trouble when it comes to title loan fees and excessive finance charges. If you’re behind on your payments or can’t make the minimum payment due, it’s best to contact your lender as soon as possible before the situation becomes worse. Many state laws provide that if a borrower has an overdue title loan then their vehicle may be repossessed; but if they pay all past due interest, fees, and charges within 10 days (or other timeframe depending on your state) then the borrower may retain possession of their car.
This is actually very good for the customer because most states have harsh penalties for failing to pay a title loan including additional fines, suspension of license plates and so much more until it gets paid off in full. Keep in mind, that title loan companies don’t want to spend money repossessing your car and in fact, they would rather work with you to negotiate a way for you to get out of the title loan!
There are companies that offer transfers of title loans to get out of a title loan without losing your car, but your vehicle must meet certain requirements. For example, some states allow for an in-house transfer between borrowers within the same state. It’s best to check with your lender before you apply if you want to go this route.
Just be aware that transferring or rolling over your title loan might not always be the best option because it may not save you money once they tack on additional fees and interest charges. A title loan refinance is similar to a buyout and can save you a considerable amount of money, but again you will typically need to be current on the payments and most people looking to get out of online title loans are facing a financial shortfall. Unfortunately, most lenders will find any reason under the sun just to charge more interest when extending the life of your contract which means that transferring or rolling over the car title loan will be difficult.
Whatever you end up doing, the best advice we can give is don’t ignore the situation at hand. Take the initiative and do whatever you can to get back on track with the monthly loan payments. Ignoring your title loan obligation can cause untold problems and financial headaches not to mention the fact you will have more penalties and fees added to what you already owe.
It is possible to legally get out of a title loan without losing your car but you need to be open to suggestions. Remember that some lenders may be willing to work with you as opposed to repossessing your car or selling it at auction as quickly as possible. In some cases, being late on your payments can help bring urgency to the situation and increase the odds you can get out of a car title loan without losing your car!