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Published Date: December 10, 2021
Alexandra Pencer, with a solid career in consumer finance dating back to 1994, is recognized as a trailblazer in the field of car title loans. Her vast knowledge and decades of hands-on experience equip her with the unique ability to assist individuals facing various financial dilemmas. As a renowned specialist in car title loans, Alexandra frequently shares her insights and knowledge through comprehensive writings on the subject.
What Happens If Someone Defaults On Their Car Title Loan? At Car Title Loans California, we believe it is our responsibility to fully equip you with the necessary information about auto title loans so that you are adequately educated before and even when making a financial decision.
Car Title Loans California is always available to assist you in every way we can to ensure you enjoy the best car title loan experience. There is this popular question asked by borrowers and even some clients; What Happens If Someone Defaults On Their Car Title Loan?
Well, this is why you must learn all you need to know about car title loans so that you make sound and responsible financial decisions. So, let’s find out What Happens If Someone Defaults On Their Car Title Loan.
Policies, terms, and conditions differ between lenders. However, in most cases, lenders are willing to assist borrowers to completely repay the loan rather than go through the stress of documenting paperwork, or even repossessing and re-selling the car in an auction.
Despite the numerous available options for getting financial assistance from a lending company, getting a loan first comes to mind.
There are several loan options, characterized by pros and cons. But, getting a Car Title Loan (also known as title pawn or pink slip loan) is the easiest and quickest option.
All of our referral partners are in compliance with the CFPB, so you will be dealing with a reputable company, and one that you can trust, if you currently have a title loan with another company, and you do not like the terms, contact us, and we can refinance your title loan.
A car title loan or a vehicle collateral loan is a form of a secured loan or a secured cash advance. It involves giving up the title to your car or vehicle (car, pickup truck, motorcycles, vans, or SUV) to a lender or a car title loan company as collateral in exchange for a specific loan amount.
As long as you own a car, you can access this type of loan. A title loan is also based on the equity you have in your car or vehicle.
People take out a title loan for so many reasons, especially people with bad credit or poor financial records. When people face critical financial burdens and need fast cash to attend to such urgent needs, then a vehicle identity loan comes to their aid.
The benefits of a car title loan are numerous. It is fast and stress-free. Usually, the title loan lending company will process and payout the requested loan sum on the same day of application.
Also, title lenders don’t pay much attention to your credit. Rather, some lending agencies will require that you have some form of monthly income (either from a job, unemployment grants, or retirement pension).
All borrowers need to access a title loan is to provide the lender with the necessary information and document, and in exchange, get the loan amount (a certain percent of the value of your car, while they keep driving their car as long as they don’t default on the loan agreement).
It is true that when most people face a critical financial challenge, the next best option is to get an auto title loan. However, nobody attempts to acquire a loan with the anticipation that they would default on the loan repayment.
On most occasions, borrowers do all they can to ensure they completely pay off the loan as agreed on the terms of the loan.
Well, in life, anything can happen. And even if you keenly want to avoid this from the outset, having an idea of the possibilities of these things happening will give you a better chance of handling such instances.
What Happens If Someone Defaults On Their Car Title Loan? When a borrower gets a loan from a title loan company, some terms were agreed upon before the lender’s hands over the loan amount to the borrower. The terms will cover the interest rate, monthly repayment amount, repayment period, as well as the consequences of defaulting. This is What Happens If Someone Defaults On Their Car Title Loan.
A default on an auto title loan is the situation where a borrower fails to follow through on the terms agreed with the lender when taking out the loan. This default will be stated in the borrower’s contract.
A typical example of this situation is when a borrower misses the monthly payment, does not pay the agreed monthly amount, or does something the loan agreement states out that the borrower cannot do (something that is prohibited by the contract).
After a default occurs, the lender may attempt to contact the borrower to discuss simple and efficient ways to remedy the situation before needing to come up with an otherwise solution.
But, not all lenders understand your plight in such situations. While some lenders may offer to help you, others will remain unavailable at this point, leaving you boxed up in your predicament. The downside of defaults is that the moment a borrower defaults on their auto title loan, the lender is backed up by law to seize the borrower’s vehicle or car at any time.
The law does not permit a lender to make threats or apply physical force against borrowers when they default. Though, they are allowed to enter the borrower’s property to impound the car or vehicle even without notice.
However, at Car Title Loans California, we can decide to work with you to prepare another payment plan that will fit your current budget and ease the pressure of defaulting.
Though this option may not be a guarantee, we are always available and accessible, open to helping you through issues like this to meet an agreeable end.
What Happens if a Borrower Defaults on their Auto Title Loan?
This is how car title loans work; when you approach a car title loan firm with your car and title to apply for a title loan, the lender lets you borrow a percentage of the value of your car, and holds onto the title until you pay back the loan while you continue driving your car. This is similar to What Happens If Someone Defaults On Their Car Title Loan.
Technically, what this means is that a person gives the lender the title to their vehicle, and then the lender signs on as the lienholder of the vehicle’s title.
That is, you temporarily surrender the document showing your ownership of your car to a title loan company in exchange for a specific loan amount, making your lender the “lien holder”.
This effectively gives the auto loan company the legal right of ownership over that vehicle. Now, an agreement binding the contract is set, and both parties will sign the agreement. This agreement will indicate that you retrieve the car title and regain ownership of your car when you repay the borrowed loan amount in full.
In other words, the loan agency removes the lien on your car or vehicle when you repay the loan and returns the title to you. The contract terms will outline a specific monthly payment that the borrower should pay as the standard minimum payment. Borrowers are also permitted to pay off the loan early without a prepayment penalty. Now you know quite a bit about What Happens If Someone Defaults On Their Car Title Loan.
In some cases, borrowers get hit with unforeseen and unpleasant challenges, and then there is the possibility that for some reason, the borrower falls behind making payments on the agreed schedule defaulting on the auto title loan.
The dilemma with defaulting on your title loan is the loss of your car. When a borrower defaults, the repossession agent from the lender may show up and seize your car anytime, without considering your present position (whether you are home or away) When a lender takes your car on account of default, it is called repossession. The lender is solely responsible for all the repossession expenses.
You should even expect forced repossession of your car when you least expect it. Sometimes, the lender doesn’t need to notify you before coming to take your car unless stated otherwise in the agreed contract.
The truth is, when it comes to vehicle repossession, it depends on the lender. Some lenders will be quick to repossess your car even after just one missed payment, while others could require that at least you miss several payments before they implement this repossession step.
On the other hand, some lenders prefer not to repossess your vehicle. This is because the process of repossessing a vehicle is stressful, and consumes time and money. Car Title Loans California believes it is a better option to work with you to prepare a new payment plan that will be easier for you to achieve.
We know it is normal for some people to feel scared to approach their lender if they default, or are close to defaulting on their vehicle title loan. But for us, you don’t need to worry.
Even if you are currently with a lender that is too strict and unsupported, we encourage you to give us a call today. We can also help you with refinancing your car title loan by paying off your current lender and coming up with a new payment plan.
This doesn’t mean that repossession never occurs. Rather, our lender allows you to renegotiate the terms of payment and also encourages you to see that you meet up payments.
In summary, What Happens If Someone Defaults On Their Car Title Loan?
What Happens if a Car is Repossessed?
When you sign up for an auto title loan, you usually sign a lien which gives the lender the legal ownership of the car. The obvious thing that happens is that the car could be repossessed if you don’t comply with the agreed payment plan.
This is what gives lenders the right to repossess your car and subsequently sell it in an auction to recover the loan. However, the issue of vehicle repossession differs between lenders.
So, the answer to the question above is simple. It depends. Most lenders are usually not comfortable inflicting more punishments on their clients. They try to give as little stress as possible to their clients.
Such that, even if they repossess the car, you (the borrower) can still get it back if you resume making payments or if you approach them to agree on a better and convenient payment plan for the future.
If the borrower shows the willingness to repay the lender the loan amount within a specified period, then some lenders can also decide to give back the vehicle to their clients. This may not be the case with all title loan agencies, but it is the case with Car Title Loans California. Now you know What Happens If Someone Defaults On Their Car Title Loan.
In most cases, it benefits both the lender and the borrower when the loan amount is repaid as agreed rather than through repossession. In a situation where the lender sees the need to go all out to repossess the car, the lender may require sending a notice of repossession to the borrower before attempting to repossess the car.
Sometimes, borrowers may realize sooner that they cannot meet up payments, and that repossession will be almost inevitable. The borrower could decide to go directly to the lender and agree to drop off the car. This is called voluntary repossession.
This can save the borrower from certain negative penalties and most of the unpleasant repossession is seen usually when lenders repossess the vehicle, they attempt to auction and sell it. The money realized at the auction will be used to cover the debt on the title loan incurred by the borrower.
If the vehicle is sold for more money at the auction than the outstanding loan amount, then the lender will have to return the extra cash to the borrower. Of course, this is rarely the case. Almost all cars sold at an auction typically go for less than the actual loan amount.
Also, any personal property in the car at the time it was seized should be returned to the borrower as well. Therefore, if you happen to discover that you are behind on your monthly payment, or if you are struggling to meet up payments, then you should explain your challenge to your lender.
Never stay caged in your situation. Communicating with your lender is your best chance of avoiding the embarrassment of repossession and getting a better outcome.
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