Like any other lending company, title loan companies can use the threat of repossession to recover items such as a vehicle 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 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. The good news is that even if your vehicle is repossessed because of lack of payment, you still have rights and legal protections to get your car back.
What Are The Current Laws Regarding A Title Loan Repossession
The current laws in most states allow lenders to come and collect vehicles 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, there will be no further action.
When a vehicle is taken back through repossession, the original contract between you and the lender is rescinded.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
You can take a few steps 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 keep the lender happy and help 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, it may allow you to take back your collateral without going through any legal problems with the lending institution.
Make sure if you’re in default of a contract, 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 A Car Title Loan Company Repossesses My Car
When a title lender has repossessed a vehicle, it can be returned or sold at a licensed vehicle auction. If your car is returned to you, 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 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. Doing this 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 constantly change the laws and regulations regarding secured loans. These changes often make it illegal for lenders to charge excessive interest rates and fees with further penalties.
Another significant change is the number of states regulating secured lenders and, subsequently, the repossession laws. This has been a gray area in the past because there were no specific state laws regarding the practice. As time passes, more legislation is being passed to make them safer for 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 decides to take back your collateral, you may have difficulty trying to get a new loan from another company 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 repossession. You can also 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, 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 learn more about how we can help you better understand your rights regarding 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.