The default of title loan is described by a borrower’s failure to repay the money that has been lent in compliance with the terms agreed by both parties. In all cases, you need to hand over your car’s title to the lender. Otherwise, you may consider the rolling over perks for the loan.
This takes place by paying another monthly fee, allowing you to borrow the money for another month. However, it is anticipated that as you roll over several times, the situation will end up with you not being able to pay. That’s why it’s important to compare rates and loan amounts for each online lender.
The vehicle repossession terms differ from one company to another. There are cases where immediate repossession takes place. Some states may provide a longer grace period than what we see on a national level. In situations like this, it’s important to know your legal rights.
There are many state and federal laws that protect consumers from bill collectors. Start with reading up on the Fair Debt Collection Practices Act. Besides the federal regulations, there are dozens of state and city specific rules that protect consumers who fall behind on online title loans.
Many people are worried about being treated unfairly by the lender once they default the title loan. It may be happening in some places, but under the law, a lender is not allowed to make threats. Asset takeover by force, physical threats, or anything of similar measure are not allowed. The lender has to avoid running afoul of the state repossession laws.
Most importantly, you cannot be arrested for default on an online title loan. You cannot be prosecuted for not repaying car title loans. The lender only has the power to take possession of your vehicle in a reasonable way. There will also need to be a notice regarding this movement. Take note if a company threatens that you will be jailed. In most cases they could be sued for violating the Fair Debt Collection Practices Act.
How to Prevent Title Loan Default?
Prior to moving forward with a car title loan, you should check out other financial resources first. It has been an ongoing myth that companies often charge their borrower’s high-interest rates.
As a result, many firms have released offers with lower interest rates due to the competitive industry. Nonetheless, there are more dependable options than using your assets as collateral, such as the following:
- Savings Accounts
- Bank Loan or Credit Union
- Family or Friends Assistance
- Credit Card
You could decide which of your options is best by determining the fees, APR, and payment terms. Also take into consideration of what happens in the worst case scenario. In this case that would be a repossession.
It is all about careful decision-making before taking that leap for a title loan. Always decide based on what is best for you. When you’ve made the decision be sure to compare collection practices of all the top online title loan companies. It’s important to know what will happen if the worst case scenario occurs and you default on a title loan!