A title loan can be a popular option for those who have a low credit score, and in most cases, you can keep and drive your vehicle while repaying your loan. But what happens if you get into an accident while you have a car title loan?
There are a few options to consider when you get into an accident while you have a car title loan.
Contacting your Auto Insurance Company / The Other Parties Insurance Company
Almost all title loan lenders will require that their borrowers will have car insurance (coverage may depend on the needs of the lenders). These lenders require insurance coverage for this very reason.
Your insurance company should be able to cover any damages if you have caused a car accident, however, the amount of coverage will depend on your specific insurance policy and the liability coverage that it offers. Most basic coverage will take care of medical bills related to personal injury or any injuries to the other driver.
For example, in most cases collision coverage/collision insurance may only cover fender benders, while full coverage will provide security for a totaled car from an auto accident.
If another person is at fault or is involved in the accident it is important to get the other driver’s insurance company information.
Once your insurance has all the information that you need, you will get reimbursement on a fair market value for either the full car amount or for the necessary repairs.
Let your Lender Know About the Accident While You Have a Car Title Loan
The next form of contact you should make, after a car accident, is your title loan company. When you take out a title loan, the lender will become the lienholder. This will mean that they will legally be the owner of the vehicle. And so, they will need to know what state the car is in.
From here, your insurance company should be able to take care of the costs, in most cases, however, what happens when your insurance cannot cover the costs for car repair or cannot give you an amount for the value of your car in the case that it is a total loss.
Well, don’t panic there are a few options that may work for you.
Paying out of Pocket for the Remainder of the Auto Title Loan
Let’s say that you only have a few more payments left on your car title loan. And the loan amount is payable. One option is to just pay off the remaining balance with your title loan lender.
Repayment Plan with Your Exiting Lender
If you have a large loan amount left to pay for your loan, you may be able to work with your existing lender to come up with a plan for loan payments that are left on the vehicle. Keep in mind that this may not be a possibility depending on your lender.
Refinancing Your Car Title Loan
For those who cannot pay for their car repair or for their lender, may want to look into refinancing their existing loan.
Refinancing a loan involves using a new loan to pay off an existing loan. When the loan is taken out, you will have a new payment plan and interest rates. If your car is totaled and you cannot pay off your loan with an existing lender, consider a new loan and lender.
Here are a few loan types that can be used to refinance an existing loan:
- Personal loans
- Car title loans
- Credit cards
- Home equity loans
- Payday loans
And so, as you can see, having insurance coverage before taking out a car title loan can be extremely helpful and can save you a ton of hardship that can come after an auto accident. This is one of the main reasons that title loan lenders will require their borrowers to have insurance coverage while they are repaying their car title loan. Looking for a car title loan, but not sure where to start? At Max Cash® Title Loans, we are the #1 nationwide online title loan marketplace. And, we make it easy to connect with auto title loans and title loan lenders.5 To get started with an online car title loan simply head to our website to apply or give us a call at (855) 561-5626. Once approved for an auto title loan the funds can be available in as little as 24 hours.1 2 5