If you have found yourself in a mess and drowning in debt due to poor decisions and title loans, you have come to the right place. This article will detail the different companies that pay off title loans and how you can get out of your debt spiral and get your finances back on track.
Everything You Should Know About Title Loans
Facing an unanticipated expense may leave you scrambling to find extra funds to address the issue. Whether you want to commence on a repair, make a purchase, or liquidate a bill, a title loan may come in handy. You are perhaps wondering what a title loan is and how it works, primarily if you have not previously used other funding options, such as car title loans.
Before getting into a financial contract, getting a detailed analysis of title loans is wise. This post has comprehensive facts about these types of loans. So, read on.
What Are Title Loans?
Title loans are short-term loans that necessitate borrowers to use assets as collateral. These loans are famous for two primary reasons:
First, the lender doesn’t consider the applicant’s credit scores rating when evaluating the loan’s qualifications. Second, the loan is approved fast, and the applicant can receive a small amount, such as $100, because it incorporates minimal loan terms.
How Title Loans Work (to make you poor)
Provided you fully own a car and have a lien-free car title, you can apply for an auto title loan from lenders that offer it. You have to show the lender your license, car, and vehicle title (proof of ownership) as you apply for the loan. On approval, you will have to surrender your car title to receive the loan.
Although a financial institution determines the loan terms, the title loan process is similar to payday loans as you need to repay them within 30 days. However, They do not accept partial payments, you have to make a single lump-sum payment once your repayment deadline comes.
The title loan lender requires you to repay the entire loan requested and any interest and fees. Notably, most title loan companies charge a monthly fee of roughly 25% of the loan amount, which, when calculated, translates to an annual percentage rate (APR) of nearly 300%!
Here is where title loans become problematic. The fact that your vehicle serves as collateral means you can lose it should you fail to repay the loan in time. Therefore, it is sensible always to pay these loan costs on time to avoid losing your asset.
How Much Can People Borrow?
Following assessment, most title loan lenders can give you anything between 25% and 50% of your vehicle’s value. While some give you as low as $100, others might give you upwards of $10,000.
Is Your Title Loan Stressing You?
While getting a title loan may be easy, reimbursing seems like an uphill task, mainly if one has financial troubles. Paying the loan on time is the best way to prevent your car loss. For those struggling to pay their current loan, here are some solutions to consider:
- Request a loan to repay your title loan
- Sell your vehicle
- Negotiate with your title lender
- Look for a title loan buyout
- Default
How Title Loans Can Affect Your Health and Stress Levels
It’s a fact that loans stress people. According to Thriving Wallet’s research, approximately 90% of Americans assert that financial considerations affect their health and stress levels. Here are the key findings from this study:
- 65% of the respondents say that they find it hard coping with the financial problems linked to loans
- More than 40% wish they could restart their financial objectives
- Approximately 40% says they aren’t taking noteworthy steps to protect their financial future
- Nearly 40% say they can’t enjoy their daily lives due to loans
- Less than 25% says they are optimistic about their financial future
The apparent stress linked to title loans is mainly common amongst millennials. This young generation is more likely than the older generation to have negative insights about title loans. Indeed, most don’t believe that title loans can negatively impact their overall well-being.
Can You Default On A Title Loan?
Yes. However, this is the worst financial decision because you could lose your vehicle and even get a bad credit score. The lender might compensate the loan by taking your vehicle, but if the vehicle’s value isn’t sufficient to cover the loan, they may also decide to come after your wages.
The Consequences Of Defaulting On Title Loans Repayments
The title loan company will seize your car without notice because you have used its title as collateral. Although some online lenders send you notices of car repossession to offer you an opportunity to repay the loan, others don’t.
It’s True, There Are Companies That Pay Off Title Loans
You read that right. You can work with companies that repay loans or refinance to lower the amount you owe a lender or pay off a loan with exorbitant interest rates.
Companies That Pay Off Title Loans
If you are searching for companies that can assist you in paying off your loan, the good news is that they are in abundance and will give you another loan comprising much better terms. A simple Google search based on your State and needs will provide you with a list of companies specializing in paying off title loans.
However, remember to assess the company loan terms and conditions to avoid getting into deep trouble.
Factors to Consider When Searching For Companies That Pay Off Title Loans
Listed below are the top tips to use when looking for companies that can pay off your loans:
Interest Rates
Well, this is the primary thing to consider. A high interest translates to more money to the lender and less to you. Negotiate for low-interest rates.
Service
No one likes unreliable customer service. However, if the lender avoids your questions and only wants to conduct the business, it’s practical to switch to much better lenders.
Payment Plan
The repayment plan you design with your lender can significantly affect how to manage your other finances. The best creditor is the one who is flexible to tailor affordable repayment plans to fit your needs.
How To Pay Title Loans With Other Loans
If you are struggling to repay your title loans, you can opt for an affordable personal loan offered by credit unions, banks, and online lenders to settle them. The best thing about personal loans is that they don’t include collaterals, as creditors approve your loan application depending on your current income and credit scores. What’s more, they have low-interest rates.
What Is A Title Loan Buyout?
Simply put, a title loan buy-out means a new creditor reimburses your existing loan and offers you a new one with much better payments and interest rates. It is similar to refinancing.
Steps To Take To Get A Title Loan Buyout
First, assess your current title loan paperwork. Second, closely evaluate the lender’s terms and conditions. The chances are that you will encounter excessive interest rates. After checking out these details, you can contact a title loan buyout company for assistance.
The best thing about these companies is that they can engage the previous lender on your behalf to agree on an affordable title loan buyout settlement.
Banks That Buy Out Title Loans And Other Options
Although traditional banks don’t buy out title loans, hosts of title loan agencies can buy out your loan.
How You Can Get Out Of A Title Loan
If you have a vehicle title loan, you are highly likely to pay excessive interest rates and fees, which places you at risk of losing your vehicle. Instead of losing your car, it would be advisable to consider options that might let you get out of title loans fast.
Even with a bad credit score, you can work hand in hand with your lender to get out of the loan. Here are the best ways of getting out of a title loan.
The Ideal Solution
The simplest way is to repay the loan. However, this is a tricky scenario because you wouldn’t have requested a loan if you had the extra money in the first place. So, if you have the money to refund, call your lender and ask for the best payment structure to follow.
Filing for Bankruptcy
In some circumstances, filing for bankruptcy may be a relief to most title loans. It can assist you in avoiding liability to a deficiency judgment, which is a rule that states you should pay the difference between the amount you still owe and your car’s value.
However, remember that the vehicle will continue to serve as collateral, meaning the lender can repossess it should you fail to pay. Financial experts advise people to discuss their situation with local lawyers before filing for bankruptcy.
Avoiding Title Loans
Another excellent solution is to avoid title loans altogether. Once you start avoiding title loans, you will be well prepared to handle your financial woes. Preferably, you can create an emergency savings fund or even improve your credit score to get countless access to loan options should the need arise.
Default
Although defaulting is allowed, you must consider the consequences before defaulting. For instance, going this route negatively affects your credit score, and the bank repossesses your vehicle. Of course, you may decide to surrender your car willingly, but remember, you may still witness a bad credit score rating.
Sell the Car
Swapping out the vehicle makes sense if you lack sufficient cash to repay the loan. Nonetheless, it might be a daunting process as you don’t have clear proof that you own the vehicle, but it’s still achievable.
Consolidate or Refinance
The other notable option is to replace the title loan with another one. While this option doesn’t solve the central problem, it can stop you from getting into extreme financial challenges.
What Happens If A Title Loan Company Goes Bankrupt?
Should your title loan lender exit the business, your debt may or may not be relieved. Remember that some debt collector agencies buy debt from lenders who are going out of business. So, if that happens, your debt may be purchased by some of these companies, meaning you still owe someone the loan.
Title Loans Pros And Cons (mostly cons)
Reviewing a title loan’s pros and cons before taking one out can help you discover whether it is the best option for you.
Pros
No Credit Check
Most of these title loan lenders don’t check your credit score. This aspect is exceptional if you want a loan but if you have bad credit that doesn’t meet traditional loan requirements or have exhausted all available credit unions. Title loans are incredibly easy to get, and with online title loans from PaydayChampion, you can quickly and easily get the money you need.
Fast Approval And Access To Funds
Lenders will only take a couple of minutes to review the application, assess your vehicle, and ultimately approve the loan. You can access the funds almost instantly or after a few days following loan approval.
Cons
Inflated Interests And Fees
Due to finance charges, interest rates, and other hidden fees, title loans’ annual percentage rate can be as high as 300%. These excessive charges can further hurt your financial obligations.
Potential Debt Trap
According to CFPB, over 50% of auto title loans become problems to debtors. Simply put, debtors will continue to request new loans to reimburse the previous ones. These loans are dangerous and harmful as they can get you into debt cycles that you can’t evade easily.
Losing an Asset Is Easy
Title loans can put you in dreadful situations. For example, you can lose your vehicle if you fail to repay the loan. Thus, you need to pay the loan on time to avoid the prospective burdens included in these loans.
Short Repayment Terms
These loans often require you to repay within 15 to 30 days. Compared to traditional loan repayment terms that range between six months and three years based on how much one borrows, it’s evident that title loans offer short repayment terms.
This short repayment period may not give you sufficient time to search for the funds to repay the loan. Worst, consider the high APR.
Other Methods Of Paying Off Title Loans
If you already have an automobile title loan, here are the methods to incorporate for fast repayment:
Pay Off The Balance Early
Try paying off the loan as quickly as possible if you happen to get the money early. Working overtime, asking for help from a friend, borrowing money from family, or working on a temporary job can help you repay the loan and prevent vehicle repossessing.
Refinance
You can take another loan to refund the title loan. Having good credit scores lets you qualify for loans with better fees, interest rates, and no collateral needed.
Negotiate Loan Terms
While the lender might not offer room for loan term negotiations, it doesn’t cost you anything to inquire. Consider asking for a low APR and an affordable payment plan that fit your demands and have the agreement in writing.
Try Debt Management
A nonprofit agency can contact your lenders and get you a plan that suits your budget if you require any assistance in your overall debt situation.
The Best Alternatives To Title Loans
Nearly all other options are better than title loans. If you need a loan, consider these alternatives first:
Payday Alternative Loans
Although they are similar to title loans, payday alternative loans are provided by federal credit unions and do not need collateral. The notable thing is that they offer small figures but much friendlier repayment terms. The credit union may, for instance, require you to make affordable monthly payments over a few months.
This loan guarantees any amount between $200 and $1,000. The best thing about these loans is that federal credit unions cap an interest rate of 18% to them. So if you have a bad credit score, credit unions can help you find another loan. However, it would help if you were a registered credit union member to get an alternative payday loan.
Credit Cards
You will receive a particular credit limit after applying for a credit card, which you can use on a need basis. However, you need to refund the balance after every 30 days to access another loan limit. All unpaid balances accumulate interest, but the limits are low compared to title loan interests.
Note: If you can pay the credit balance month after month, you are typically borrowing an interest-free loan. Indeed, some credit card companies offer customers no-interest financing periods for the first year of card ownership. Therefore, it’s always advisable to opt for these offers.
Personal Loans
Personal loans are typically unsecured loans you can get from an online lender, credit union, or bank. It’s possible to qualify for these loans even with bad credit. Individuals with good credit scores can get interest rates of 10% or below. On the other hand, those with bad credit scores can get rates of roughly 36%. Moreover, the repayment period can be between two and seven years.
Family And Friends
Another loan option is to ask for help from your circle. Your family members and friends are not likely to enforce high-interest rates like title loans and payday loans. The truth is that most are sufficiently friendly to formulate a perfect repayment schedule that fits the two parties.
A Financial Expert’s Opinion
As you have seen above, you will have undesirable consequences if you fail to repay your loan on time or disregard it altogether. Also, some shady online lenders hit customers with high-interest rates, penalties, and other hidden fees even if they pay the loan on time and abide by the rules.
It is no secret that avoiding title loans is the best option. However, if you already have an existing title loan, it would be wise to ensure it’s your last. You have worked smart to develop an incredible credit score and create an emergency savings account.
So, don’t let title loans destroy all of these benefits. As described in this post, you can see plenty of safe options you can use to get a loan.
General FAQs
What is the fastest way to pay off a title loan?
Although there are no exceptional tricks to help you pay off title loans fast, there are tips you can incorporate to help you make the repayment fast. These tips include; tightening up your budget, talking to the lender, consolidating the loan, avoiding taking the entire amount, or selling your car.
Will title loan companies settle?
Although title loan companies are under no obligation to settle, it’s sometimes possible to get a settlement on your title loan to resolve it.
Can you go to jail for not paying a title loan?
Although debt collectors like to scare loan applicants with jail threats, the truth is that you cannot be jailed for failing to repay a title loan. However, you should expect severe consequences like ballooned interests, negative credit, and other fees.
Can title loan companies garnish wages?
At first, your lender will seek help from a court and wait for the judgment based on the owed amount. However, the court may allow the debt collection agency to garnish your wages or even place a lien on your asset in some situations.
Can title loans hurt your credit?
According to credit bureaus, your credit history accounts for roughly 35% of your existing credit score. The fact that this value primarily impacts your credit score means it’s sensible to repay the loan on time.
All in all, most lenders don’t report payment history to credit bureaus, meaning title loans have insignificant impacts on your credit score. Nonetheless, a few companies report customers who default on loan payments. So, it’s wise to inquire from your lender how they work with credit bureaus.
