If you default on your loan, or stop making payments, your car could potentially be repossessed.
Learn about title loan repossession laws and what you can do if you find yourself falling behind on payments. When you know your options, you can make better decisions for your future.
Many people find themselves falling on hard times, unable to pay their bills or afford other necessities. There may be a solution available that will help you get out of a bad situation.
Knowing the title loan repossession laws before you get into trouble with your payments helps you prepare and prioritize in advance. In the event that you do find yourself struggling, you should know all your options to avoid a repossession.
What is a Title Loan Repossession?
A title loan is a loan taken out against the title of your vehicle. When you find yourself in need of funds quickly, and unable to take out a standard personal loan from a bank, a title loan may be a good option.
Many people use title loans to bridge the gap between an immediate need for money and an expected amount of funds that has not yet arrived. Borrowing against your vehicle is a great way to get money fast.
It’s important that you only borrow the amount of money you’re capable of paying back. Title loans are based on collateral. Using your vehicle as collateral means you can borrow, in some places, up to the full value of your vehicle.
Similar to a car note, or standard car loan, if you default on payments for your title loan, you could lose your vehicle.
When a loan is in default, the lender must find ways of making up for the money they lost. One way of doing this is to repossess the collateral, your vehicle, and sell it.
Once the vehicle is sold, it’s possible that there will be a remaining balance owed to the creditor, or lender. As the borrower, you’d be responsible for covering the remaining balance.
Having your vehicle repossessed will impact your credit.
Is Title Loan Repossession Legal?
A title loan repossession is legal. The terms of repayment and repossession will be stated within the contract you sign when you accept funds from the lender.
When you apply for a title loan, it’s important that you make sure you’re fully capable of paying back the loan, in full, plus interest. Do not take out more than you can repay.
The monthly loan payment amount will also be stated in your contract. The contract terms are meant to protect the lender, as well as the borrower. Read your terms and conditions over carefully before signing any paperwork or agreeing to accept funds.
Once you have signed an agreement, entering into a contract with a lender, you are obligated to uphold your end of the contract.
Timely payment is essential to maintaining or improving your credit score and a default can result in a legal repossession.
About Title Loan Repossession Laws
Understanding title loan repossession laws will help you make the best decisions about your situation.
A car title loan repossession is a real possibility if you stop making payments in accordance with your contract. A title loan repo will negatively impact your credit – something to keep in mind before accepting loan terms.
If your vehicle is repossessed you will be without a vehicle, potentially still owe money, and have a negatively impacted credit score, leaving you with little options for the future.
Make sure you understand exactly what will happen in the event you’re unable to repay your loan. Also, be sure to review your finances thoroughly to ensure you’re able to take on this added expense.
Here are some points to know about title loan repossession laws:
Possessions Inside Vehicle Cannot Be Sold: If your vehicle is repossessed, any personal possession inside the vehicle cannot be sold for to recoup their money.
One Missed Payment Can Result in Repossession: Each state sets their own laws. However, in some states, repossession is allowable after one missed payment.
You Could Lose Your Car at Any Time: Once you’re given notice that your loan is in default and your vehicle is being repossessed, your car could be taken at any time. That means you might be at work, or on your way to pick up a family member, and your car will not be there.
Avoid a title loan repo by making timely payments and staying in contact with your lender when you run into trouble.
Your Car Got Repossessed – Now What?
There are various steps that lead to a car title loan repossession. You may initially become late on payments, or maybe you miss one or two. Your lender will probably contact you after the first or second missed payment to discuss your options.
If you fail to respond to the lender or can’t accept any alternative offers, according to title loan repossession laws, you could be at risk for repossession.
Here is what you can do at each stage to avoid or overcome a repossession:
I can’t make payments: If you’re unable to make payments, contact your lender immediately. You need to find out what your options are to get back on track. Title loan repossession laws protect lenders and you could lose your vehicle if you don’t make timely payments.
I stopped payments: If you have stopped making payments, your account has likely gone into default. At this point, you still have time to contact your lender and try to make arrangements to pay your loan and keep your vehicle.
My car was repossessed by a title loan company: You may still have options. Your car has been taken but if you’re able to talk with your lender, repay fees and any associated repo fees, you might be able to reinstate your loan and get your vehicle. This will vary by state.
If you find yourself in a dire situation, make sure you reach out to your lender and discuss your options.
Receiving a repossession notice is serious, do not ignore the notice. Title loan repossession laws allow lenders to recoup their money through repossession.
There is still time to manage your situation in a way that helps you keep your car and avoid a negative mark on your credit.
How to Avoid Title Loan Repossession
When you take a title loan out on your vehicle, you are using your vehicle as the collateral for the loan. Defaulting on the loan means the lender can take the collateral and sell it to make back the money they lent.
Once your vehicle is repossessed, you may not be able to get it back, depending on the repossession laws in your state. This will also harm your credit and you may still be responsible for any balances owed.
Avoid a title loan repossession by ensuring you’re capable of repaying the loan prior to accepting the terms. Prioritize making payments on the loan so you don’t lose your vehicle.
If you do get a repossession notice, contact your lender immediately and see what options might be available to help you keep your vehicle.
Looking for a title loan with great rates and fast processing? Contact Montana Capital Car Title Loans today!