What Happens When You Default on an Auto Title Loan?

Car title loans are also known as pink slip loans, title pawns, and title loans open today, they are usually meant to provide short-term loan for individuals who have bad credit but own their car free and clear. This type of loan is meant for people who will not ordinary qualify to secure a loan in banks and other financial institutions. 

A title loan can be risky as borrowers risk losing their cars due to the offers they get from lenders that looks blissful. A car title loan can be the real deal to help you in tight financial situation just as it might be a trap that will put some other borrowers in trouble. Hence, before you go for a car title loan, make sure you have a solid plan on ground. 

Most lenders market title loans that are of high interest rates, with short-term to individuals who do not have the income or credit to qualify for loans at reasonable rates. The offers look enticing as some of the borrowers can’t afford these loans or repay the loans on time.  

Title loan lenders do not check your credit as far as you can provide a lien-free title of a car in your name, and spare keys of your ca keys. They only require few documents such as ID, proof of residence, and a driver’s license among others.

The Dangers of Title Loans

When you live on your paychecks like most Americans do, any slight emergency can jack things up than you can ever imagine. All may seem good until your car suddenly breaks down and you need cash to fix it or you need to renew some of your utility bills. If you don’t have a friend or relative to lend you money, then you have to look at other options that may become more expensive but you wouldn’t have any choice but to go for such options despite the fact that it is expensive. 

If you do not have good credit, then it becomes a little more difficult as you might not be able to get low interest loans in emergency situations. With the options of a car title loan being the only way out staring at you in the face you will have to use the title of your car to obtain a loan despite the risk of losing your car if you are unable to repay the loan. 

Reports show that 20% of borrowers who apply for title loans lose their cars to lenders who repossess them as a result of their inability to pay back the loan.  

What Happens after Repossession

If you default, your lender will come to you and probably give you some time to pay up or negotiate the return of your car before it is auctioned. If your car is auctioned, and the money is used to cover the loss on the loan. If they have balances left they still might not give you a refund as most states where title loans are legal operate based on pawn laws.  

Read more from https://www.bloglovin.com/@danpencer/is-owning-your-own-car-a-thing-past .