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 knock at your door to repossess your car.
Vehicle repossession is when a lender legally removes your vehicle because you failed to clear your title loan on time. They can then auction it off to recover their money. You must pay the deficit if the car is sold at a price lower than the loan’s value. Although the usual cause for vehicle repossession is missed payments, it can also happen because you don’t have proper insurance (in this case, you only need to adjust your insurance policy).
What Are The Current Repossession Laws Regarding Online 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 must give two weeks’ notice of impending action in response to a default, which provides the borrower with a short timeframe to try and honor the payments. The statement must be written and include the overdue amount. 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 can 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 that lenders that provide online title loans often consider repossession 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.
Contact your lender immediately if you missed a payment. Convince them to refinance your loan, roll it over to the next payment date, or help you develop a new payment plan. Remember that rolling over attracts additional fees and interest but is better than not paying back your title loan.
How Long Before A Title Loan Repossession Takes Place
Most states have different limits on 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 handling the situation. Before losing your vehicle, the last option is to voluntarily surrender your car to the title loan company. This spares the online repo fees we see from title loans, which would otherwise be passed down to you. In this case, a lender will be more forthcoming and help you 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.
If your vehicle is in danger of repossession, you should never try to 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 can pay the outstanding loan before the vehicle is auctioned off.
If the lender disagrees, then, unfortunately, you may have to give up your vehicle. You may also consider filing for bankruptcy before the auction, as the lender cannot sell your car without court permission.
Know Your Rights If A Title Lender Repossessed Your Vehicle
If your car is repossessed and sold, you can dispute the repossession if the lender violated your rights in any of the following ways:
● The lender damaged your private property or threatened to use force or violence during the repossession
● The lender did not provide written notice of the repossession
● The lender attempted to collect the 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 Repossession
Fear of repossession shouldn’t scare you away from getting cash with your vehicle’s equity. At Car Title Lenders USA, we aim to provide you with the latest secured lending regulatory updates, including title loan laws updated by each state. We also offer our Directory of Top Title Loan Companies to help you find a competitive rate in your state.