Yes, in a title loan, your car serves as collateral for the loan. If you fail to repay the loan according to the terms and conditions outlined in your agreement, the lender has the legal right to repossess your car.

However, the specific rules and procedures for repossession can vary depending on state laws and the terms of your loan agreement.

It’s crucial to understand the terms of your title loan and make payments as agreed to avoid repossession.

Title lenders usually want to avoid taking your car, but if you miss too many payments, they might have to repossess it. Then, they’ll sell it at an auction to pay off what you owe on the loan.

The Word ‘Repossession’ Can Be Scary

When you’re unable to repay your loan, the word ‘repossession’ can be scary. You should know that many lenders don’t immediately begin repossession proceedings if you miss a single payment. You may be able to work with your lender to adjust your repayment terms or continue to make payments with added fees and penalties.

When Could My Car Be Taken for Title Loan Non-Payment?

The time before your car might be taken due to missed title loan payments can differ between lenders. Look at your contract for exact details about your loan. In general, if you don’t pay and don’t talk to your lender, your car could be taken within about 30 days.

Why Do Lenders Do This?

Both borrowers and lenders benefit from the loan being repaid according to the original terms. In other words, you share a mutual interest in satisfying the loan. Before defaulting on your title loan and losing your car, discuss a repayment plan directly with your lender. You may be able to work out a solution and avoid repossession.  

Here’s What You Should Know if You Don’t Pay a Title Loan Back:

Title Loan Repossession

With title loans, you sign an agreement stating that you understand the lender can take the car if you miss your payments.

Each state has different laws regarding an owner’s redemption rights after defaulting on a car title loan. Your state’s laws also control how and when a lender can repossess your vehicle and if you are liable for any outstanding balance after it is sold.

Hit on Your Credit

If a title loan lender repossesses your car, it may hurt your credit significantly.

While you won’t go to jail if you don’t pay a title loan back, it can cause serious credit score issues and leave you without a car. Losing your car plus having a lower credit score may make it more difficult to buy another car with financing.


If you get behind on your title loan, you may be subject to fees. These can be for missing payments, repossession, and potential legal costs. These fees vary by state.

Be careful. Some states do not have a fee cap, so some car title lenders can charge as much as they see fit. Having a clear understanding of the fees you will incur if you fail to make payments or have your car repossessed is essential. Talk directly to your title loan lender to have the most up-to-date information.

What Happens If Your Car is Repossessed by a Title Loan Company?

When a title loan company takes your car, they must follow strict rules. They use licensed agents for this. They should also give you at least 10 days’ notice before selling your car. They have to tell you when and where they’ll sell it.

You can try talking to the company about making a new payment plan. If you can catch up on your payments, you might get your car back and stop it from being sold.

Tips for Title Loan Borrowers to Avoid Vehicle Repo

Open Communication:

If you’re facing financial difficulties and can’t make a payment, contact your lender immediately. They might be willing to work out a temporary solution or modify your repayment plan.

Find a Trusted Co-signer

Consider asking a friend or family member to co-sign. With a co-signer, you may have a better chance of securing better terms and avoid repo.

Have a Side Hustle or Look For Ways to Make Instant Money

Consider starting a side hustle or finding other ways to make instant money. There are many opportunities that pay instantly, like driving for Uber or delivering groceries for Instacart.

Create a Lifestyle Budget to Help With Paying off Debts

If you have too many debts, redo your budget to allow room for paying off debts. If you free up some of your disposable income, you’ll have more room to pay the most important bills.

Written by Samantha Hawrylack

Written by

Samantha Hawrylack

Samantha Hawrylack writes for our company and is an expert in personal finance. Sam received her Bachelors of Science in Finance and her Masters in Business Administration from West Chester University of Pennsylvania. She began her career in the financial services industry and shifted to an entrepreneurial role where she could directly impact clients. Sam has an impressive background in personal finance and business management.