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Spanish Are you in danger of missing an upcoming title loan payment, or have you recently fallen behind? First, take a deep breath and then take action to get back on track with your payments. Here's what we recommend at Hyperlend:
Defaulting on any loan can adversely affect your access to credit, which can lead to higher interest rates and further issues getting approved for emergency funding. On the other hand, the inability to access financing makes getting a loan with a lower interest rate difficult. We often see this when customers apply for a title loan in California. With secured loans in California, most lenders have competitive rates, and you should choose a lender willing to help you if you may ever default on the payments.
The following is what you need to know before you fall behind, and what to do after you've defaulted on the monthly payment.
How To Know If You’ve Defaulted On A Car Title Loan
You officially default when you fail to make payments as per your agreement with the lender. Most people don't know what constitutes a title loan default in their state. Laws regarding loan defaults vary between jurisdictions; you will typically default when you fail to make payments according to your loan agreement. Some states may give a short grace period before you can legally be declared to be in default.
Now for some good news! Defaulting isn't the end of the world, and you won't immediately lose your car or be taken to court. Lenders are usually happy to negotiate a new repayment term because repossession is expensive and inconvenient. Not only that, but they'd prefer you keep paying the loan as they collect their fair share in interest each month. So don't hesitate to contact your lender if you're concerned about falling behind on the loan.
Steps To Avoid Falling Behind On Your Loan
- Let your lender know quickly when you can make the next payment - making your title loan payment priority number one is critical, as it lets your lender know that you will make a payment no matter what. Setting up direct deposit for an upcoming payment tells your lender that no other payment will be prioritized over the title loan payment. The money you set aside to make the payment will not come to you; therefore, there will be no chance of you using it for other purposes, no matter how urgent.
- Get a second job to make extra payments - Making a few extra dollars helps repay your loan. The money may not be much, but it will add up to a full installment with time. You can deposit every payment you get with the lender, even if it is just a fraction of the installment. When coupled with your regular payments, these small deposits create a buffer for you if something happens to your finances. You might even find, with time, that these deposits enable you to be a few installments ahead.
- Reduce your expenses - Paying off your loan will likely consume much of your disposable income. While making payments on the loan, you will need to reduce your non-essential costs. Reduce your expenses on leisure activities and cut out items no longer a priority. Paying a high-interest title loan should be your number one financial priority.
- Direct any extra income to the loan - Use any unexpected money such as bonuses, gifts, and side gigs to repay the loan. This extra money will help you repay your loan faster and reduce the possibility of defaulting. Most importantly, you can save considerably by repaying your loan early by avoiding excessive interest payments. Some loans are structured so you pay a larger amount of interest on the back half of the loan, and it's in your best interest to repay a title loan as quickly as possible.
What Happens When I Default On A Title Loan?
Defaulting can have far-reaching consequences, and they include the following:
- Late and repossession fees - Late payments usually attract penalties. If the lender decides to repossess the property, you must pay for towing, warehousing, and attorney fees. These costs vary in different locations. Some jurisdictions cap these amounts, while others leave them at the lenders' discretion.
- Repossession - You need to know that if your car was used to acquire the loan, it is collateral. When you default, the lender has every right to repossess it. The terms under which the lender can repossess the vehicle vary across states. Some have restrictions for your benefit, while others have no limits regarding car title loans.
- Lawsuits - Even if your vehicle is repossessed and sold at auction, you may still owe your lender money. This happens when the car sells for less than what you owe the lender. Say you have an outstanding balance on your title loan of $10,000, and the car sells at auction for $6,000. You'll still owe $4,000, and your lender can sue you and garnish your wages to collect the amount due.
What Happens If My Vehicle Has Been Repossessed?
Your lender will sell the vehicle at a licensed auto auction after a typical title loan repossession. Some states require the lender to keep the car in question for some time before selling. This may allow you to get back to current on your payments and eventually get your car's pink slip back.
Contact Hyperlend to learn how we can help you refinance your loan or get your vehicle back if it's been repossessed. Apply online to lower your monthly payment or reduce the payment term on your title. You can also call 800-971-3022, and we'll walk you through how to avoid a default and eventual repossession.
