Title loan companies, like any other lending company, can use the threat of repossession to recover items such as a vehicle that has been used as collateral for a loan. If you sign over the vehicle title in exchange for cash, then technically the vehicle has been sold to the lender and they have every right to come to take it back if you default on your payments.
Repossession of any item that is given as security (collateral) is legal when one defaults on their repayment schedule or contract with a third-party entity. This includes things such as automobiles, motorcycles, and boats.
What Are The Current Laws Regarding A Title Loan Repossession
The current laws in most states allow lenders to come and collect vehicles that have been used as collateral for a title loan. Take Texas as an example. In this state, a lender has the legal right to repossess a car if the borrower is in default of a loan contract. In most cases, if the purchased item has been returned, then there will be no further action.
When a vehicle is taken back through repossession it means that the original contract between you and the lender is rescinded. This means that you are not obligated to pay them anything more as you have already repaid your loan in full, that’s assuming the car goes to auction and the sale amount takes care of the existing loan obligation.
How Can I Get Out Of A Title Loan Repossession
There are a few steps you can take to avoid losing your car or items, such as motorcycles or boats, to repossession after taking out an online title loan. One way is by making your payments on time. Paying on time will not only keep the lender happy but help to keep interest rates low so you don’t have to pay more than the loan amount initially borrowed over time. Another tactic is paying off the loan early. If you can afford to do this then it may allow you to take back your collateral without having to go through any legal problems with the lending institution.
Make sure if you’re in default of a contract that you resolve it immediately! Failing to comply with statutory regulations in your state regarding title loan repossession laws can lead to a situation where your car is sold in a matter of weeks and you are left with nothing.
What Happens When My Car Is Repossessed By A Car Title Loan Company
When a vehicle has been repossessed by a title lender it can be returned or sold at a licensed vehicle auction. If your car is returned to you, then the original contract between you and the lender is voided. This means that there is no longer a loan owed in full and you keep your item.
You may also be able to negotiate with the lender in order to have them remove the negative mark from your credit history regarding the defaulted loan if it hasn’t yet been reported to the reporting agencies. This way, future potential lenders won’t see anything when they pull up your credit report for approval on any other loans in the future. By doing this you can also get back on better terms with your title loan company and possibly negotiate a refinance or title loan buyback.
What Else Can I Do To Avoid Having A Title Lender Repossess My Vehicle
Most states that allow title loans are constantly changing the laws and regulations regarding secured loans. These changes often include making it illegal for lenders to charge excessive interest rates and fees with further penalties.
Another major change is the number of states that are regulating secured lenders and subsequently the repossession laws. In the past, this has been a gray area because there were no specific state laws regarding the practice. As time goes on, more legislation is being passed in an effort to make them safer for both borrowers and lenders alike.
Title loan companies tend to be very careful about repossessing any items if they suspect that you’re going through financial hardship or difficulty making payments. This is especially true for companies who offer bad credit financing for no credit check title loans. If your lender does decide to take back your collateral then you may have a difficult time trying to get a new loan from another company in order to pay off what’s owed in full so you can keep your car.
What Rights Do I Have As A Borrower To Fight A Title Loan Repossession
As a borrower, you have the right to fair treatment during the repossession process. You are also able to challenge whether or not the title loan company has the legal right to take your item(s). If your vehicle is being sent to auction, then you have certain rights that come along with that. For example, if your car doesn’t sell for enough money to cover what’s owed in full then you can expect all parties involved to start coming up with settlement options so everyone walks away satisfied.
Contact the team at Car Title Loans Today to find out more about how we can help you better understand your rights when it comes to online title lending repossession laws. You also have the option to work out an alternative lending arrangement or even a title loan refinance that lets you avoid repossession and get you back on track with making consistent monthly payments.
