What Does it Mean to Default on a Title Loan?
Default typically occurs when a borrower fails to adhere to the terms set by their lender in their loan agreement, which can include missing a payment or not paying the entire amount. After a loan default takes place, the lender will attempt to contact the borrower to discuss whether the default can be remedied in a simple and efficient way before escalating the situation. If you default on a title loan, however, things can get a little bit more complicated because your vehicle is used as collateral to secure the loan. If you are unable to keep up with your loan payments and you default on a title loan, your car or truck could be repossessed by your title lender.
If you are concerned about what happens when you default on a title loan, LoanMart wants to educate you on the potential consequences of loan default and some of the ways you can try to prevent it. We encourage you to call LoanMart at 855-422-7412 if you are having trouble with your loan payment. Our customer service agents are helpful, empathetic, and attentive. Make sure to call as soon as possible to discuss your potential options!
What Happens if You Default on a Title Loan?
Are you curious about what happens if you default on a title loan? If you cannot keep up with your monthly payments and default on your title loan, the title lender can repossess your car, sell it, and use the proceeds from the sale to pay off the remainder of your loan. If the proceeds from the sale do not cover the entire amount that you owe, you could still be responsible for the remaining balance.
In most cases, a title lender will try to avoid vehicle repossession and work with you to explore other options (if possible). In the event that you default on a title loan, you can expect the outcome to be affected by your loan agreement, the lender, and your current state of residence.
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What Happens if My Vehicle is Repossessed?
If you default on a title loan, the car title loan lender can repossess your vehicle and sell it at auction. The money that the title lender receives from the auction will go towards the remaining balance of the loan and any fees associated with the repossession or storage of the vehicle.
Depending on your state of residence, the title lender may be required to notify you before the vehicle is repossessed. You may also receive a written notice from the lender that will let you know what steps you can take to get your car back before it’s sold. Additionally, the title lender may be required to return any of your property that is found in the vehicle. It’s important to review the terms of your loan contract and state laws in order to fully understand your rights if your vehicle is repossessed by the title lender.
What Happens if You Don’t Pay a Title Loan?
If you aren’t already aware of what happens if you don’t pay a title loan, the potential consequences could be severe. Defaulting on a title loan may result in the repossession of your vehicle, which may negatively impact your credit score and prevent you from using the vehicle for transportation.
If you are having trouble paying your loan, please contact your lender or loan servicer immediately to discuss your options. Many title lenders and loan servicers are willing to work with you to avoid repossession, but it is important to call before you default, not after! The LoanMart title loan representatives are available 6 days a week for extended hours to take your call.
How Can You Prevent Title Loan Default and LoanMart Repossession?
You may not be able to plan for everything that happens in life. While unexpected financial challenges can occur without warning, it is important to do your best to avoid late payments and defaulting on your title loan. Fortunately, there are a number of different strategies that can potentially help you avoid loan default and LoanMart repossession:
- Keep Communication Open and Honest With Our Team: If anything changes with your financial situation during the repayment process and you are struggling with your payments, it is extremely important to keep your title loan representatives in the loop. If you have lost your job or an unexpected expense has thrown your budget out of whack, you should inform your title loan agent immediately. Don’t be afraid to reach out if you need help!
- Consider Refinancing the Loan: If you are struggling with your monthly payments, consider refinancing your title loan. Refinancing is the process of taking out a brand-new loan to pay off your existing loan. You can try to refinance your existing title loan with LoanMart and potentially obtain different loan terms.1
- Consider Talking to a Professional: If you are having trouble paying back your title loan because of your financial habits, you may want to look into meeting with a financial advisor. They may be able to help you create a budget and get your finances back on track. If you are worried that you may default on your title loan and cannot afford a financial advisor, you could use an online budgeting app like Mint to create an effective budget on your own. All you have to do is provide the necessary information about your income and your fixed / variable expenses, and the app will do the hard work for you!
- Get Your Payments Back on Track: One of the simplest ways to prevent your title loan from going into default is to continue making payments. Consider getting a side gig that can help supplement your income and prioritize your title loan payments! Depending on your availability and skills, there could be a number of ways to earn extra income. You could try freelancing or selling unwanted household items. In some cases, you may be able to find part-time or seasonal work!
- Pay Your Loan Early with No Prepayment Penalties: With title loans serviced by LoanMart, you can pay your loan early with no prepayment penalties or hidden fees. If you have the means to pay your loan early or pay more than once a month, you are encouraged to do so.5
If you are concerned about your financial situation and cannot afford your title loan payments, consider refinancing your current title loan! Find out if you can qualify for title loan refinancing on the LoanMart website today by filling out a short inquiry form or giving a loan agent a call at 855-422-7412.1
