We receive a lot of questions from consumers when they want to take out a car title loan. Many applicants will ask, does it make sense to use my vehicle’s equity as collateral? Should I apply with multiple title loan companies or with my local neighborhood lender? Those are valid questions, and we attempt to answer those and many others in different articles throughout our site. With that, we can tell you the most common question and lending tips we come across. We often get asked if you can keep driving your vehicle during the full lending term. The answer is yes, you should be able to keep driving your car while you have a vehicle title loan outstanding. This applies to most of the largest lenders in states where title loans are most common. There are outliers and special circumstances to consider that we’ll attempt to break those down now.
Most borrowers will enter into a financial agreement with a direct lender that says they hand over the pink slip for their vehicle. In turn, they agree to a specific lending contract that says the applicant will make on time monthly payments, often for a term of 30 days. Assuming you stay on track with payments and run into no other financial issues you will be fine. The finance company will keep the pink slip as collateral to your car. The car title will be returned to you after the secured loan has been paid in full. One issue we see with online finance firms is the fact that contracts can be vague. Because the contracts are complicated you need to understand what you’re getting into. Some contracts state that a lender can repossess your vehicle if you fall behind or even miss a payment by one day. In this case, a title loan lender has the legal right to take your vehicle and keep it until you get current on payments. You will also have to pay any applicable fees like towing costs and impound charges. Some states like Florida will even require you to update the pink slip or title information if there’s been a change.
It’s very important to get back to current on your payments if you end up in a situation like this. After a certain amount of time the lender has every right to sell or auction off your vehicle. Once that happens they will settle out the account and you will no longer own the car. In any case it’s critical to know your rights when it comes to what happens when your car gets repossessed. Don’t assume the automobile is gone forever. You have protections in place from your state and Federal Government. Most companies that offer car title loans don’t want to see a situation like this occur. It can be very expensive for your lender to repossess a car, impound it and auction it off. Many car title loan companies are willing to work with you but you need to reach out to them and be transparent about the situation. Work out a payment plan that fits into your monthly budget.
There are certain situations where you may not be able to keep your vehicle during the life of a car title loan online. Always ask yourself, “should I really take out a loan on my car?” In most situations, you’re going to pay a high amount of interest each month that a lender has the vehicle title. Much the same as if you pawned a watch or boat, you’re handing over the vehicle to the lender as collateral. In other situations, you can keep driving the car. But the title loan company will insist on installing some type of tracking device to monitor the driving and whereabouts of your vehicle. We know this isn’t as common as it used to be. But it’s worth nothing to be very careful of companies that do this. It’s one thing to hand over a pink slip as collateral, but do you want a title loan company to know your every move. Do you want to be in a situation where you forgot to send in a monthly payment? Or you may have had an issue with your credit union or bank checking account? Is the car tracked and monitored for movement?
A licensed lender has the right to find the exact location of your vehicle and have it repossessed per the title loan contract. Don’t find yourself in this situation. Only agree to a contract with a company that offers car title loans completely online. Choose a lender who has your best interest in mind and is willing to negotiate the terms and payoff amount. Move on, if your title loan company is not willing to negotiate the lending terms. Consider other options like a personal loan or installment advance as these choices won’t involve you using a vehicle as collateral for the loan.