How do you avoid paying back a title loan company that has your vehicle as collateral? Although title loan companies do not fully check your credit, they usually have your name and address on file. Most importantly, they have your car and can possibly repossess the vehicle if you fall behind. Of course, you can fall behind on purpose by deciding not to pay back the loan or you may not be able to make the payment. But either way, it’s not a good idea if you can’t back a title loan.
Even though a lender can repo your car if you fall behind it’s not ideal for them to go that route. The process of physically taking your car and sending it to auction is costly and takes time. They’d rather have you making monthly payments and will work with someone who can’t pay back a title loan company. An agreement on payments and payoff reduction is ideal for both parties as the lender gets their money and the borrower will keep driving the vehicle.
Talk to your lender before you stop making monthly payments
If you are in financial trouble and having difficulty in paying money, then you can always talk to the company that is granting you the title loan and possibly reach a payment deal that will allow you to pay the money that is owed. They may be able to offer you a solution where you will give them a certain amount of money and then they will pay the difference between what is due and what you are able to pay. In some instances, they may even offer you fifty percent of what is owed and just have the extra money forgiven. You may also be able to negotiate to pay a certain percentage of your monthly payments if you have a steady income to pay on the payments. Although you might not actually get out of the installment agreement you will still save your credit rating from becoming negatively affected.
Some title loan companies will renegotiate your title loan rate and terms
If you’re in financial distress, making extra or early payments may be a wise idea, especially if you are still working on improving your credit rating. Just do not make too many of them, as getting out of paying the debt you owe may only be a day or two, which won’t affect your credit rating and could be forgotten about behind the payments. Consider Highway Car Title Loans where you have the option of getting a title loan refinance.
Alternatives to paying back your online title loan
There are other ways to make payments to title loan companies aside from paying them via monthly installments. One way is to offer the title loan company a cash sum to pay off the full amount due. If you have some money on hand you may offer them a lump sum amount and they may be willing to take it. Although you may lose a considerable amount of money, many will whole heartily accept it if they can get something instead of nothing. The goal here is to pay off the full amount owed without incurring a prepayment penalty. Read through your contract and make sure there’s no mention of an early payoff penalty.
What happens if you completely stop paying your title loan
If you are unable to get a cash sum option or you simply don’t want to, your best option would be to pay back your debt as soon as you can. As much as it would cost you, it is still recommended to not ignore the loan as you may end up paying higher interest and penalties than you anticipated.
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.