When you get approved for an auto title loan, your repayment terms are explained by the loan officer and approved by you. Most payment plans can be as flexible as a few months long to a 36-month repayment period. But, paying off your loan early is highly encouraged by most lenders. But what happens if you miss a title loan payment?
There are usually no prepayment penalties when you pay early.3 That can help you avoid the risk of defaulting on your loan.3,4 If you are unable to make your monthly payments, you can call your loan officer. Let them know that you would like to review your repayment options.
Find out more about your refinancing options with Max Cash Title Loans today!
How Many Title Loan Payments Can I Miss Before Going Into Default?
A default payment means the borrower has failed to make the payments required to keep the loan account in good standing. The period of time after a missed payment, which sends a loan into default, can depend on the state that you live in. In some states, there is a grace period; in others, default can happen in as little as 30 days.
When a loan defaults, it could be sent to a collection agency that will call the borrower and try to collect the unpaid debt. Generally, letting a loan go into default can have serious consequences. This includes reducing your credit score and your ability to get future credit. It can even lead to the repossession of your vehicle if you used your car as collateral for a loan.
Borrowers who fail to pay back their auto title loans have a serious risk of having their vehicle seized by their lender. Each state has its specific procedures that lenders follow during the repossession process but there are a few generalities that they all follow.
Talk To Your Lender if You Miss a Title Loan Payment
Many things are outside your control during a financial crisis. But you do have control over your communication with the lender. Lenders can have significant input on how to handle a tough financial situation. Or, in some cases, they will work with you to come up with a resolution.
Most people believe that speaking to a lender will make things worse when the reality is, that’s the first place you should call. An analysis of the issue is critical, but if you need time, prompt notice of the problem with a request for time to review is better than silence. Being transparent about what is happening allows for open and candid discussions that will help you build trust with the lender. Give them a call, they may be able to give you an extension- or work out a payment plan that better suits your particular situation.
Can I Refinance My Car Loan If I Miss a Title Loan Payment?
Refinancing can happen after a late payment, but it’s very difficult if you’re currently behind. Lenders typically require you to be up to date on your vehicle payment- among other requirements- in order to approve you to refinance an auto loan. The process of refinancing pays off the existing loan. Then, that loan is replaced with a new loan, giving borrowers somewhat of a fresh start. That allows you more time to pay back what you owe. Give us a call to talk about your refinance options with Max Cash Title Loans!
Grace Period vs. Deferments
There are two types of grace periods, grace periods and deferments. A grace period is the time creditors give borrowers to make their payments before incurring a late charge or going to default on the loan. During grace periods, interest may or may not accrue, depending upon the loan’s terms.
Deferments are also periods of time in which borrowers do not have to pay on loans. But deferments most often require an application and proof of financial hardship before the loan holder may grant them. Most deferments are not guaranteed, so borrowers need to be prepared to pay their loans, or risk going into default. Both grace periods and deferments are periods of time during which a borrower does not have to pay a lender money toward a loan.
What Happens if Your Car is Repossessed After You Miss a Title Loan Payment?
No one is prepared to have their vehicle impounded. A car repossession could happen if you fall behind on your monthly payments. It can cost you money and time. Not only could you lose your car, but if the bank resells the vehicle for less than what you owe, you may be held responsible for paying the difference. If there is any property within the vehicle, often, the lender must return it to the borrower. Repossession is generally the last resort for lenders. Typically, the goal is to have the loan paid off before it gets to that point.
What Is A Charge Off?
When a debt has been charged off, it has most likely turned over to a collection agency for collection. In some cases, the collection agency is being paid to collect the debt for the original lender.
Is a Charge Off Better Than a Repossession?
Both of these options are not good, but in some cases, a charge off is better than a repossession. When a car is repossessed, the lender not only gets to keep the money you’ve already paid, they take your vehicle and you will still owe the deficiency balance after the vehicle is sold. A charge off is sent to the collection agency to collect the debt for the original lender.
Get Your Vehicle Out Of The Impound
Borrowers today have more options than ever before. If you need some help, don’t hesitate to contact Max Cash Title Loans. We are happy to answer any questions you may have about car title loans, missed payment options, or even getting a different car title loan while your vehicle is impounded. We lend out a hand when other companies refuse to help.5 Let Max Cash Title Loans work for you at no cost!5
Is There a Benefit If I Pay Back My Loan Early?
- Early Payments: If you have a title loan, you might wonder if it can be paid back early. When a loan is paid back earlier than agreed upon, the lender usually loses out on interest fees. The way some lenders can recover is by adding prepayment penalties to the terms and conditions of a loan- but most do not have such penalties.3 If your title loan is paid back early, you can potentially save on interest!
- On-Time Payments: Inquiring and obtaining a loan requires you to go through a hard credit check. That may lower your credit score and appear on your credit report. This is necessary to make sure you are able to afford the loan and that you can potentially pay it back. So make sure that you make on-time payments to help your score!
- Credit Scores: Most borrowers will see running their credit as a negative, but you could use it to your advantage. When a title loan is paid back consistently on time every month, it could reflect positively on your credit score!
What Happens After I Pay My Loan Back?
After you repay your loan, a few things happen:
- Confirm your final payment details with your loan agent and let them know you want to start the title retrieval procedure.
- Your car title becomes lien-free through different mediums- like electronically, manually, or by submitting an official form with your vehicle title information.
- Visit the local DMV near your area and get your car title ownership back.
Call Max Cash Title Loans Today!
No matter where you are located in the United States, chances are we can help you with a short-term loan while you get back on your feet.5 When you need fast cash, do not hesitate to apply for a hassle-free online experience! Call Max Cash Title Loans today for a free quote!