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What Happens If Someone Defaults On Their Car Title Loan?

Car title lenders have helped out a lot of people with financial issues fix up and moved forward with their lives. Car title lenders help make the process of obtaining a car title loan easier and faster. Car title loans are quick loans, also known as pink slip loans, are gotten in exchange for your car as collateral. Car title loans can be gotten using either a car, minivan, RV, truck, or bus. The loan is given based on the equity (resale value) of your car.

This loan, however, is meant to be paid back to the lender after a period of time, based on the agreed monthly payments.
However, a lot of people are not knowledgeable about the consequences of defaulting this contract and not paying their debt.

What Is A Default On A Car Title Loan?

After a loan is issued to an individual, which is usually the car owner, a monthly payment plan is agreed between the lender and borrower. This monthly payment plan is meant to be adhered to by the borrower, a default occurs when there’s a violation of the agreement.

Any action that doesn’t connote with the laid down terms is a default on a car title loan. It could be refusal to make the full payments of  a loan, or a reduction of the monthly payment made. It could, also, be no payment at all from the borrower. Each of these scenarios is a default on a car title loan.

What Are The Consequences Of Defaulting On A Car Title Loan?

The consequences of defaulting on a car title loan are inevitable, because it is all on contract. When you register for a car title loan, you make use of the title of the car, which allows the lender sign in as the lien holder of the car. This leaves two options for the lender if you default on the repayment plan. He can either;

  • Make you pay any additional charges/penalties, which will be added to your loan.
  • Repossess your car, because he has the right to sell it to get his money back.

Even though this is your fear, a lot of lenders would rather consider working with you to make your payment, because it is less strenuous. The process of getting your car, filing papers, and selling it at an auction is long and tiring, however, it does happen sometimes.

What Happens If My Car Is Repossessed?

Getting your car repossessed by a lender can be disheartening, however, there might be hope. If you’re late on payment of your car title loan, your lender will usually send you a notice for the repossession of your car.

You can reach out to your lender and work out a payment plan that is suitable or possibly pay off some of the money. If these options are not possible, your only option is to hope your lender can auction of your vehicle for a price above your loan.

This money should, also, be above the fee spent in filing your papers as well. Your lender is legally obligated to give you whatever money is left from the money acquired after auctioning of your vehicle.

Whatever the case may be, it is always advisable to call your lender the minute you realize you cannot keep up with the payments. Communication is always the best option in situations like these.

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