How To Get Out Of A Title Loan

Last Updated 3 weeks Ago

It is very easy to get into a title loan, but it can be very difficult to get out of one, especially if you are with the wrong lender.

Car title loans are expensive, some lenders will charge triple digit interest rates, and have short terms so it is difficult to pay off the loan, so you end up having to roll over your title loan into another short term title loan.

Getting a car title loan are high risk loans, because if you do not make your monthly payments, you can end up having your vehicle repossessed.

Getting Out Of Your Car Title Loan

If you need to get an online title loan, you need to choose one that has longer terms to repay the loan, you can get terms on title loans from 24 month to 48 months, with no prepayment penalties.

Make sure that you also get a title loan with amortized payments, so your payments will go towards your principal and your interest.

Stay away from 30 day term title loans, as they are interest only payments, and they will roll you over into another title loan if you cannot pay off your title loan after 30 day, this can lead to a cycle of debt.

Selling Your Car

The easiest way to pay off your car title loan if you do not have the cash balance, is to sell your car. It can be a little difficult to sell your car without a title, so you will have to have the buyer agree to pay off the title loan company, so you can give them the title.

You can alway buy a cheaper car, while you are getting your finances in order, but some car dealers have great deals on new cars with very little down payment.

The interest rate that you will pay on your car purchase will be much lower than the interest that you will pay on your title loan.

Refinance Your Title loan

Another way to get out of your high interest title loan is to refinance it , and replace it with a lower interest title loan.

You will still have a title loan , but you can get one with much better terms, and lower monthly payments.

Or you could also refinance your title loan into a different type of loan with lower interest rates , and better monthly payments.

Local banks , and credit unions may be able to help you, so it is important to shop around to find a loan to pay off your title loan.

You might need someone to cosign for you with a lower interest loan, this will stop the bleeding of the high interest title loan payments, and get you into a more affordable loan.

When you ask someone to be your co-signer, they are taking the financial responsibility for the loan, in the event that you default on the loan, they will be financially responsible for it.

Talk With Your Title Lender

It might be worth talking to your existing title lender, they may be willing to work with you, and lower your monthly payments, or even negotiate a lower payoff.

Offer the amount of money that you can afford to pay, your title lender might want to keep you as a client instead of losing you all together.

You never know what the lender is willing to do, and how they will work with you until you talk with them, they might give you the lower interest rate , and the lower monthly payment that will work with you.

Having a settlement on your credit report will hurt your credit score, but in the short term it can help you to get back on your feet, and out of the potentially dangerous title loan that you are in.

Defaulting On Your Title Loan

You could always default on your car title loan contract by not making your monthly payments, but this will hurt your credit score, especially if the vehicle is repossessed.

You can also voluntarily surrender the vehicle, but there will be no repo fees, and you will have a lower balance with the title loan company.

You might still have a balance on the loan once the vehicle is sold, which you will be responsible for, and you will have no car. But you will no longer have to pay the high monthly interest charges.

Filing for Bankruptcy

When you file for bankruptcy it will give you relief from your car title loan payments, but the vehicle is still the collateral for the loan in the bankruptcy, so you will still need to make the monthly trustee payments.

Filing for bankruptcy is a drastic move, and this should be the absolute last resort, and this should be discussed with a bankruptcy specialist or your attourney.

Not Getting A Title Loan

Not getting a title loan in the first place would be the best thing to do, but if you need some fast money, and your credit is not good, they can be a solution for you.

Building up an emergency fund, to take care of any financial emergencies is the best thing to do.

Improving your credit score will also help you if you need to get a loan from a bank or a credit union.

Getting A Title Loan

If you do find yourself in a situation that you do need to get a title loan, then it is very important to choose wisely.

Not all title loan companies are the same, so it is important that you shop around to find the lowest interest rate, and with terms that will not put you into a financial mess.