There's no getting around the fact that your vehicle can be repossessed if you can't make payments on a title loan. Losing your car because you defaulted on the payments is one reason you must be proactive to avoid this situation. Apart from the inconvenience of not being able to drive your car, repossession can impact your credit score and interest rates on any future loans. This article discusses various ways to get out of a title loan.
Get Out Of A Car Title Loan Without Losing Your Vehicle
The easiest way to get out of a car title loan is to be proactive and pay it off as quickly as possible. You can do this all at once with a lump-sum payment, or make all your required monthly payments on time. Prioritize saving as much money as possible to pay down the borrowed amount. Contact your lender to see whether they will forgive any debt or allow an early payoff at a lower interest rate. If you have extra cash flow each pay period, consider paying more than the minimum, which will shorten your repayment term. Let's break down your options to get out of your lending obligation without losing the car.
Refinance your future payments.
Have you ever considered refinancing your current loan? It doesn't matter if you refi with the current lender or find a new company that offers better rates and payoff terms. Once approved, you should get new payoff terms with a lower monthly payment. Refinancing is much easier if you're still current on the payments, so contact your lender to avoid a default. Contact Highway Title Loans at 877-433-5454 for more information about our refinancing options and to determine what types of terms to expect with a refi.
Get a personal loan to get out of a title loan
These loans typically have high interest rates, so getting a low-interest personal loan to repay your vehicle-secured loan may make sense. Remember, most customers who take out secured loans have poor credit and would have used an unsecured personal loan if that were an option. But if your credit has improved, an unsecured personal loan can be a viable way to pay off a loan in full.
Negotiate new payoff terms for your existing vehicle-secured loan
If you can't afford to repay the loan, contact the lender immediately and ask for new repayment terms. Negotiating a new payoff term is different than refinancing, as you simply ask the lender if they're open to lowering the APR or reducing the balance owed. You'd be surprised at how often you can get new payoff terms by speaking to the right person. Most lenders would rather have you make new payments under new terms than take your car away.
Default on the loan & negotiate with your lender to avoid losing a vehicle
Defaulting on the monthly payments can also be an option here. However, a loan default is never something we recommend, and anytime you fall behind on payments, you risk repossession. Even if a title loan lender in Atlanta repossesses your car and sells it at auction, you may still be responsible for an amount you owe that is not covered by the sale. If you're ever in a situation where you may default on the payments, it's best to contact your lender to see if there are other options to avoid having your vehicle repossessed.
Contact your lender to get out of a title loan.
We can't stress enough how important it is to stay in touch with your lender if you're at risk of defaulting on your payments. Most lenders have customer service teams willing to work with you to keep your business. Yes, they can always repossess your vehicle and sell it at auction to cover the amount you owe them. However, this is not ideal for a lender, as it costs money to repossess a vehicle and prepare it for auction. On top of that, there's no money coming in as they're no longer getting your monthly payments.
Lenders are more willing to work with you if you stay in contact, and you can likely work out a deal to improve your rates or lower your monthly payment. Even if you're stuck in a title loan, there are options, and we can help you chart a path to get back on track with payments and eventually regain the car's certificate of title.
Janet Patterson is VP of Marketing Communications for Highway Title Loans and the feature editor of its Lending Blog. Janet has worked in the financial service industry for over a decade, with 7 years of experience in the car title loan industry. She previously managed a customer service team that helped and advised consumers on all their lending related questions and concerns.