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Getting out of a car title loan can be difficult. But it’s better than finding yourself when the lender takes your vehicle because of a lack of payment. Or worse, your vehicle is for sale at an auction because you fell behind on payments. That’s why you must take the initiative and be aggressive if you feel you must legally get out of a car title loan.
There are ways to get around these lending hassles and retain possession of your car without paying the entire amount due on the loan as listed on your contract. Let’s break down your handful of options if you need to get out of an auto title loan contract.
In nearly every state, you have the right to resolve 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). Most people end up trapped in their fees because they don’t understand what rolling your loan over means, and they 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 regarding a title loan repossession, and you can take legal action if they don’t follow the rules.
This is the ideal situation, but also unlikely for most people in this situation. If you have the means to pay down the loan, then you should do so. However, 
if you don’t have the means to get out of an auto title loan by paying upfront, it doesn’t matter how much money you put down or if your lender charges an early payoff fee. Again, most borrowers can’t make early payments or pay their loans off in full, but you should do everything possible to get out of your financial obligation early.
If you don’t have enough cash to zero out your debt but want to avoid a vehicle repossession, the next best thing is to roll over or renew your loan. Many people apply for a title loan with no job or even a source of income, which causes problems later in the loan term. A loan rollover can be beneficial because it allows you more time to put together the amount owed, plus interest. Even better, most states allow borrowers to extend their original maturity date (the date on which the principal was due) when they renew, extending their payoff date.
A loan rollover may not be applicable for a car title loan in every situation, 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 can sometimes get more money than your vehicle is worth. But you will also need to deal with the fact that the lender has your car title, which will complicate the sale. Most states make transferring a valid title from one owner to another easy, but you still have to deal and negotiate with three parties to complete the sale. If you go this route, investigate how to sell your vehicle without a title legally.
Most lenders understand and will work with borrowers to resolve any financial trouble regarding 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 reach out to your loan officer as soon as possible before the situation becomes worse. Many state laws provide that if a borrower has an overdue title loan, their vehicle may be repossessed. Still, the borrower may retain possession of their car if they pay all past due interest, fees, and charges within ten days (or another timeframe, depending on your state).
This is 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. Remember that title loan companies would rather not spend money repossessing your car; they would instead work with you to negotiate a way for you to get out of the title loan!
Some companies 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 the payments 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 refi is similar to a buyout and can save you considerable money. Still, again you will typically need to be current on the payments, and most people looking to get out of online title loans face a financial shortfall. Unfortunately, most lenders will find any reason to charge more interest when extending the life of your contract. Transferring or rolling over the car title loan will be difficult.
Whatever you do, the best advice we can give is not to ignore the situation. Take the initiative and do whatever you can to get back on track with the monthly loan payments. Ignoring the payments can cause untold problems and financial headaches, and you will have more penalties and fees added to what you already owe.
It is possible to legally get out of a vehicle title loan without losing your car, but you must be open to suggestions. Remember that some lenders may be willing to work with you instead of repossessing your vehicle or selling it at auction as quickly as possible. Being late on your payments can help bring urgency to the situation and increase the odds of getting out of a car title loan without losing your car!
