What Is A Title Loan Repossession
A car title loan, in which you submit your vehicle as collateral in exchange for money, can be a great way to get out of a financial jam–assuming you can pay it off. If you can’t, you can expect the lender to come knocking at your door to repossess your car.
Vehicle repossession is when a lender legally takes away your vehicle because you failed to clear your title loan on time. They can then auction it off to recover their money. If the car is sold at a price lower than the loan’s value, you will be required to pay the deficit. Although the usual cause for vehicle repossession is missed payments, it can also happen because you don’t have proper insurance (in this case, all you need to do is adjust your insurance policy).
What Are The Current Repossession Laws Regarding Title Loans
Repossession rules for online title loans vary from state to state. Some states have lenient terms that favor the borrower—for instance, in Wisconsin, the lender is required to give two weeks’ notice of an impending repossession, which gives the borrower a short timeframe to try and honor the payments. The statement must be written and include the amount that is overdue. If the lender fails to satisfy these conditions before the repossession, you get to keep your car, receive a refund for your payments and have your loan waived.
Most states, however, have stringent laws that favor the lender. Generally, a lender has the right to repossess your vehicle anytime they want once payment is overdue.
What To Do If Your Car is in Danger of Repossession
Being in danger of losing your vehicle isn’t a desirable position to be in. The good news is lenders that provide online title loans often consider repossession as a last resort because of the associated costs. The paperwork and expenses for towing and storage can quickly add up, so many lenders are glad to offer alternative methods to clear your car title loan.
If you missed a payment or are having difficulty raising the necessary funds, contact your lender immediately. You can try to convince them to refinance your loan, roll it over to the next payment date, or help you develop a new payment plan. Just remember that rolling over attracts additional fees and interest, but is better than simply not paying back your title loan.
Alternatively, you can sell your car for a value higher than the pending loan balance. Pay the loan and use the remaining funds as the down payment for a new car.
How Long Before A Title Loan Repossession Takes Place
Most states have different limits on the amount of time between when you fall behind and when the lender takes the vehicle, but in most cases, it will be around 30 days. That’s why you want to be proactive in how you handle the situation. The last option before losing your vehicle is to surrender your car to the title loan company voluntarily. This spares the repossession fees we see from title loans online, which would otherwise be passed down to you. Often, in this case, a lender will be more forthcoming and help you to resolve this situation. Consider that most car title loans fall into this category and you can expect a legitimate lender to work with you on a solution.
One thing you should never do if your vehicle is in danger of repossession is to try and obstruct the repossession process or hide your car—this may result in legal action against you.
What To Do After a Title Loan Repossession
After repossession, you should call your lender to try and work out a plan for clearing a defaulted title loan. See if they will offer you your car back if you manage to pay the outstanding loan before the vehicle is auctioned off. If they agree, hopefully, you can raise the necessary funds and retrieve your vehicle.
If the lender does not agree, then unfortunately you may have to give up your vehicle. Be sure to collect any personal belongings you’ve left in the car before the auction process takes place. You may also consider filing for bankruptcy before the auctioning, as the lender cannot sell your car without court permission.
If you have made peace with the repossession, make plans to settle any outstanding balance on your car title loan if the auction does not cover the total amount due.
Know Your Rights If A Title Lender Repossessed Your Vehicle
If your car is repossessed and sold, you can potentially dispute the repossession and claim protection if the lender violated your rights in any of the following ways:
● The lender “broke peace” by damaging your private property or threatening to use force or violence during the repossession
● The title loan lender did not provide written notice of the repossession
● The lender attempted to collect the deficiency balance from you even after you filed for bankruptcy
● The lender asked you to pay an incorrect deficiency balance
If you qualify for military protection under the Servicemembers Civil Relief Act, you have access to special protections. For instance, the lender cannot seize your car without permission from a court. Being aware of your car loan rights will reduce the chances of being taken advantage of by lenders.
Should I Avoid A Title Loan Because Of The Risk Of Repossesion
Fear of vehicle repossession shouldn’t scare you away from getting a car title loan if you need one. At Car Title Lenders USA, we aim to provide you with the latest secured lending regulatory updates including restrictions for 2021. We also provide our Directory of Top Title Loan Companies to help you find a competitive rate in your state.