Repossession is often the last resort and the most unfavorable outcome when a borrower defaults on their loan. Title loans are secured through your vehicle’s title, which makes your vehicle the collateral for the loan. While this can be an advantageous way to get cash, it also means you must make your payments on time, or you may have your vehicle repossessed.
When this happens, it can disrupt your entire life. If you are like most borrowers, your car is your main source of transportation, and it can be tough to imagine your daily life without it. If you are concerned about repossession or what to do if your car is repossessed from a title loan, there are ways to turn it around!
What Happens When My Car is Repossessed from a Title Loan?
Typically, vehicle repossession from a title loan will happen after the loan has gone into default. A loan being in default simply means that the borrower has failed to hold up their end of the loan contract, and payments have been missed over the course of weeks or months. In some states, a loan is in default 30 days after a missed payment.
If your car title loan is in default, it may be repossessed. While every state has different laws and procedures surrounding vehicle repossession, you can expect:
- Your Car Will Be Taken to a Tow Yard: While it is in the tow yard, you can expect your vehicle to be relatively safe, as it will be locked up.A loan company will typically outsource and hire a repossession expert to remove your vehicle from your property to transport it into the yard.
- It May Stay in the Tow Yard: If you do not make an effort to communicate your financial distress to your loan agents, it may stay in the tow yard. For your vehicle to leave the tow yard, payments must be made, or a payment arrangement must be agreed to. Typically, many title loan companies will prefer to make an arrangement with you instead of selling your car.
- The Car Could Be Auctioned: If you are unable to make payments or communicate your financial distress, it could be sold to cover the costs of your debt. If your vehicle’s sale price does not fully cover the cost of what you owe, you are still responsible for paying the remaining balance.
What are the Other Risks of Repossession from a Title Loan?
If you are facing financial trouble, your loan has the chance of going into default. Defaulting on your loan can have other risks besides vehicle repossession! One of the repercussions of your loan defaulting is your credit score may take a hit.
Payment history is one of the largest factors in determining credit. Late payments may significantly affect a credit score. Having a loan default on a credit report could impact ability to apply for loans that require a credit check in the future.
Fortunately, there are ways to get out of loan default to avoid a negative hit to a credit score and car repossession.
What Can I Do if My Car is Repossessed?
If your vehicle has been repossessed, you have options to consider besides letting your car be sold in an auction. While everyone’s financial situation is different, you can consider these options if your car has been repossessed by a title loan company:
- Report Financial Hardship: If you are experiencing job loss or wage loss, report this to your loan agent. When your loan is in danger of going into default, the most important thing you can do for yourself is to communicate your financial hardship to your loan agents. Even after your vehicle has been repossessed, loan agents are often willing to hear you out and discuss your options.
- Work Out a New Payment Plan: If you are in the process of communicating your financial distress to your loan agents, one of the options you may have is a new payment plan or schedule. This could look like paying late fees or paying an agreed upon amount to receive your vehicle back from the tow yard. Typically, loan companies prefer to work out a solution with you rather than selling your vehicle in an auction. Often, the sale will not cover your debt and interest payments. Most title loan companies are understanding and would prefer you to keep your vehicle.
- Consider Refinancing Your Loan: If you are facing financial hardship and your loan is in default, one of the options you may have to consider is refinancing. Refinancing your loan can be advantageous if you are experiencing job loss or wage loss and you cannot afford your current monthly payment. While not every borrower will qualify for title loan refinancing, it is one of the options that may be available to you if your car is repossessed from a title loan. Refinancing your loan could mean obtaining optimal loan terms that better suit your changed financial situation.
How Can I Avoid Repossession of my Car?
Staying on top of your loans and other bills may seem difficult if you lose your employment or an unexpected financial burden occurs. However, many title loan companies are understanding and will work with you to avoid repossession if you can communicate your financial hardship.
There are ways to avoid repossession to consider if you are thinking of applying for a title loan!
- Enroll in Autopay: Autopay can help take the burden off of you to remember to pay your loan each month. If you are forgetful, enroll in autopay to make sure you are not missing your payments by accident.
- Make Your Loan Payment A Priority: If you have not done so already, now is the time to implement a budget into your life. It is easier to avoid loan default if you are dedicating a portion of your income each month to your loan payment. Many different kinds of budgeting apps can help you figure out how to prioritize your bills, and where you can cut back!
- Refinance if You Need to: If you are still struggling to make ends meet after your new budget, it may be time to consider refinancing your loan. Refinancing your loan when it starts to get difficult may be the easiest way to avoid car repossession and loan default! If you aren’t sure of what to do if your car is repossessed from a title loan, this is the first option to consider.
What Do I Need to Refinance My Title Loan to Avoid Repossession?
Refinancing your loan is one way to avoid defaulting on your loan. Everyone’s financial situation is different, and it can change throughout the duration of your loan. You may be experiencing financial hardship like:
- Job Loss
- Wage Loss
- Unexpected Expenses
- Medical Emergencies
- Costly Home or Car Repairs
Whatever your reasoning is to refinance your loan, it may be the solution to avoid car repossession. Refinancing your title loan is often very similar to applying for one! To apply to refinance your loan, the first step you should take is to choose a title loan company to work with. Your current loan may not have all of the features and loan terms that fit your current financial situation.
When you refinance your title loan through ChoiceCash Title Loans, you’ll have access to optimal loan terms for your financial situation, and an easy three-step approval process!1
To qualify for title loan refinancing, there are a few requirements:
- Your Vehicle Must Have Value
- Your Current Loan Must Not Be in Default
- You Must Have a Way to Repay the Loan
The biggest qualifying factor is your vehicle and your income! A loan agent will require that you have some proof of income when you apply for title loan refinancing with ChoiceCash Title Loans. While you do not need a traditional 9-5 job, you will need some proof that you can afford to repay the loan. Additionally, your current loan must not be in default! If you aren’t sure of what to do if your car is repossessed from a title loan, refinancing can be the right solution.
Where Can I Apply to Refinance My Car Title Loan Online?
With ChoiceCash Title Loans, the process to refinance your title loan can be easy!1 When you refinance with the help of a ChoiceCash Title Loan, you can expect a simple, three step approval process:1
- Apply for Refinancing Online or Over the Phone
- Submit The Necessary Documents and Paperwork
- Sign Your New Title Loan Contract!1
If you are considering title loan refinance or you are curious if you qualify for a loan, a quote is free!1 See if you can qualify today through a ChoiceCash Title Loans by heading online to the website, or by calling a loan agent at 855-914-2945.