People take out online car title loans to pay for emergency expenses and unexpected bills and it’s safe to assume that many of these borrowers never suspect their vehicle can be repossessed. But having a lender repossess your car is a real possibility if you default on the loan or even miss one or two payments. Because of that you absolutely need to know what a title loan repossession is and what to do if you find yourself in this situation!
A title loan repossession is a legal process used by lenders to reclaim vehicles that have been obtained through title loans. This type of repossession differs from other forms of repossession in that it does not involve the use of banks or other financial institutions, but rather title loan companies. A lender has every right to repossess your vehicle when you default on a title loan, but they must follow state and federal laws.
There are several laws governing title loan repossessions, including state-level and federal regulations. If your vehicle has been repossessed, it is important to understand what these laws entail and how they may affect you. These laws and regulations will often change and most regulate how much time a lender or 3rd party collector has to repo your car as well as what they need to do after taking possession of the vehicle. Some things to consider include:
– What actions can be taken against you if your vehicle is repossessed?
– How can you avoid repossession in the first place?
– What steps do you need to take to get your car back from the lender?
– What can I do after a lender legally repossesses my car and sells it at auction?
If you are considering taking out title loans, it is essential to understand the risks involved and how to protect yourself. By doing your research and being aware of the laws governing title loan repossessions, you can help ensure that this process does not negatively impact your life.
There are a few things you can do to avoid having your vehicle repossessed:
– Make your payments on time, every time
– Stay in communication with your lender
– Do not skip any payments and always check the monthly statements for accuracy
– Pay off the loan as soon as possible and find a lender that allows fast upfront payments with no pre-payment penalty.
If you find yourself in a situation where you cannot make a payment, it’s important to reach out to your lender immediately. They may be willing to work with you to create a new payment plan or extend the due date of your vehicle title loan. Another option for borrowers in this situation is to consider refinancing your title loan with another lender or seeing if a company will buy out the existing loan. Truth be told, a refinance is the more likely option as most companies will pass on a buyout for a loan that may be in default. A refinance can be a huge benefit for someone who’s looking to get their APR down to a manageable level or reduce the amount of time it takes to pay off the loan!
Once your vehicle has been repossessed, the lender has to follow specific title loan repossession laws in your state. These laws limit how much time a lender or 3rd party collection agency has to repo your car as well as what they need to do after taking possession of the vehicle. Most importantly, these laws protect you from being harassed by lenders or collection agencies.
In general, an online title loan company will have 30 days to notify you that your vehicle has been repossessed and they may contact you during this time to try and collect payment. After the 30 day period, the lender must sell your vehicle at auction and use the proceeds to pay off the outstanding balance on your loan. If the auction does not cover the full amount owed, you may be responsible for paying the remainder of the debt. On the flip side, if the car sells for more at auction than what it’s worth, then the lender is legally required to send you the full balance after subtracting the repo and auction fees.
If you want to get your car back after it’s been repossessed, you will need to work with your lender to explore all your available options. In some cases, the title loan company may be willing to accept a partial payment or allow you to begin making payments on the outstanding balance. The most likely solution to get your vehicle back will always involve paying the full amount owed. Your lender is legally required to tell you the exact title loan value of your car and how much money you must pay to get the vehicle back after it’s repossessed. This amount will include the original amount due from missed monthly payments and additional fees for when your car was taken and stored at a towing facility.
Any way you break it down, a title loan repossession is something that amounts to a worst case scenario when you initially inquired to take out a car title loan. Take action if you find yourself in this situation and remember, you always have options, and auto title loan companies must adhere to state laws during the entire process. If at any point you feel like your lender is not playing by the rules or if they’re simply refusing to work with you, do not hesitate to reach out to your state’s financial regulator for help!