Understanding How to Get Out of a Title Loan
A title loan is a type of secured loan where a borrower can use their vehicle title as collateral for emergency funding. Title loans can cater to individuals with bad credit, making them an ideal option for a variety of Americans who may not be able to qualify for traditional loans. But when things go sour, borrowers may be searching for how to get out of a title loan and get their vehicle back.
When someone takes out a title loan, they borrow against the available equity in their car. After the loan is funded, the title lender places a lien on the title to the borrower’s vehicle. If the borrower fails to make the required payments, the lender has the right to repossess and sell the vehicle to satisfy the unpaid balance of the loan.
People may choose to apply for title loans for a variety of reasons. One of the most common reasons is the flexibility of the application process. Unlike traditional loans, car title loans typically have less stringent requirements surrounding an applicant’s credit history because the loan is secured by collateral. Additionally, title loans can appeal to borrowers who need a larger loan amount than what is typically offered by payday loans or cash advances. While title loans can be a viable option for many borrowers, they are not without risks, like many secured loan options. Defaulting on your title loan can result in losing your vehicle, which is not an ideal scenario for anyone.
Getting out of a title loan is possible, but the easiest way to reach your end goal is simply to pay off your existing title loan. You can also attempt to negotiate with your title lender to obtain loan modifications or try to refinance your current title loan to obtain more manageable title loan payments. You may have a number of strategies at your disposal.1
What Negotiation Strategies Exist to Get Out of a Title Loan?
When facing the challenge of a title loan, negotiating with your title lender or loan servicer can be a valuable strategy to explore. Still, it is not your only option when you need title loan relief assistance. By effectively communicating your current financial challenges with your lender and discussing your options, you may be able to find a solution that works for both parties.
Here are some strategies to consider if you want to get out of a title loan without losing your car:
- Negotiating with the Lender: Start by contacting your lender and explain why you are struggling to manage your title loan payments. Be open and honest about your current situation, emphasizing any hardships, such as losing your job, that have made it difficult to repay the loan. Most lenders are willing to work with you to find a solution that is mutually beneficial and helps you avoid vehicle repossession.
- Requesting a Loan Modification: In some cases, a lender may be willing to change the terms of your title loan. If you are eligible for a loan rewrite, otherwise known as a loan modification, your loan is typically re-amortized with the goal of making your payments a bit more manageable for you.
Remember, when negotiating with lenders, it is crucial to be prepared and have a clear understanding of your financial situation so you can effectively communicate why you are struggling to pay off your title loan. If you have questions about how title loans work or want to learn more about title loan refinancing, call 855-422-7402 to speak with a ChoiceCash title loan representative.1
Other Ways of Getting Out of a Car Title Loan Without Losing Your Car
The easiest way to get out of a title loan is to put all your efforts toward paying off your loan. Some of the most effective ways you can earn extra income to pay off your title loan include the following:
- Try a Side Hustle: A side hustle, such as being a food delivery driver or taking a seasonal job on the weekends, can be an efficient way to supplement your income and steadily pay off your title loan over time.
- Borrow from Friends or Family: Borrowing money from friends or family should be approached with caution and a sense of responsibility. Show your appreciation for their support by keeping your promises and paying them back when you say you will. Involving money in a relationship, especially with a family member, can be difficult, so be mindful of choosing this option if you do not want to strain any of your close relationships.
- Sell Your Car as a Last Resort: If you cannot find a suitable solution and the title loan becomes unmanageable, selling your car may be your last resort. By selling your vehicle, you can use the proceeds to pay off the loan and alleviate the financial burden. Keep in mind that you will need to find a buyer who is willing to work with you and give you the money upfront to pay off the title loan. The vehicle will not be yours to sell until it is completely paid off, and the title cannot be transferred to the buyer until your lienholder has released its lien on the title.
Legal Considerations of Car Title Loans
When facing financial difficulties and thinking about how to get out of a title loan, it’s important to understand all the legal considerations involved with a vehicle-secured loan. Defaulting on a title loan can have serious consequences, so it’s crucial to be aware of what may happen if you can’t repay the loan.
One of the primary consequences of defaulting on a title loan is the risk of vehicle repossession. Title lenders have the right to seize your vehicle if you fail to pay back your title loan according to the terms listed in your loan agreement. Losing your car can significantly impact your daily life, making it essential to explore your options before you end up defaulting on your loan. Generally, title loan laws involving vehicle repossession can vary from state to state, so it is important to do your research.
Bankruptcy is an option to consider as a last resort if you can’t repay your title loan and are struggling financially. Filing for bankruptcy can provide temporary relief and potentially halt the repossession process. However, it’s important to note that this is not a permanent solution to your financial issues involving your title loan. While in active bankruptcy, the requirement to make your title loan payments may be paused, and you can experience temporary relief, but the lien will still remain on your car’s title until your loan is paid off. Filing for bankruptcy is a decision that should be carefully considered, as it can have long-lasting effects on your credit and financial future.
Choose Another Type of Loan to Pay Off Your Title Loan
Getting out of a car title loan can feel impossible, especially if your financial situation has changed. The simplest route to get out of a title loan is to pay it off completely, but in most cases, that is easier said than done. You may need an influx of cash to pay off your title loan and get back on your feet. If you need another loan to pay off your title loan, you may consider one of the following options:
- Obtain Other Forms of Credit: Using other forms of credit to pay off your title loan may be an option. Whether you choose to get a personal loan or a credit card cash advance, understand that you should only pursue a new loan product to pay off your existing title loan if your new loan terms include an APR (Annual Percentage Rate) that is lower than your current rate.
- Try to Refinance: Another strategy is to explore your title loan refinancing options. Refinancing involves obtaining a new title loan with (hopefully) better terms to repay the existing title loan. By refinancing, you may be able to secure more competitive interest rates or favorable repayment terms, making it easier for you to repay the loan. You can try to refinance your title loan with your existing lender or try to find another lender to work with.1
- Explore a Home Equity Loan: If you own a home, you can apply for a home equity loan to pay off your title loan. A home equity loan allows you to borrow against the value of your home and access funding. Home equity loans tend to have lower interest rates than title loans, which can work to your advantage.
While there are many different ways you can try to get out of a title loan, it’s important to thoroughly evaluate the pros and cons of each option and seek professional advice if needed. If you want to learn more about title loan refinancing and receiving competitive interest rates, call a ChoiceCash title loan agent at 855-422-7402 today!1
