What Exactly is a Title Loan?
Title loans are loans in which you use the title of your car, truck, SUV, motorcycle, or recreational vehicle as security to obtain a cash loan. For a predetermined sum of money spread out over a brief period of time, the lender grants a car title loan. Typically, the loan officer will want to see the car’s title, an application, and a picture ID. Most lenders also want to see pictures of the car or have a closer look at it. It’s as easy as that: if your application is approved, you turn over the car’s title, sign the contract, and receive your money while keeping the ability to drive your car. The maximum loan amount is contingent upon the vehicle’s value. The lender acquires a lien on the car until the debt is repaid.
All things considered, getting a title loan is a great way to borrow the money you need quickly and without a lot of paperwork or delays if you are unable to get approved for a bank loan because of unemployment, bankruptcy, or bad credit.
Why Paying Off Your Title Loan Early is to Your Benefit
To begin with, you can save money on interest—the additional amount you have to pay the lender for the money they gave you—by paying off any debt early. Working with a lender that will give you the lowest interest rate on your auto title loan means you will have less money to repay because interest rates vary greatly depending on the type of loan and the lender.
However, when shaking hands with a lender, be cautious of the small letters. Reputable lenders typically don’t impose prepayment penalties on borrowers who repay their auto title loans ahead of schedule.
Of course, there’s an added sense of satisfaction when you cross something else off your list of debts to pay off.
What to Do to Pay Off Your Title Loan Faster
Finding a little extra money each month is the key to being able to pay off a title loan early and make larger monthly installments. You can achieve that by:
If, for example, your monthly payment is $176,87, round the amount up to the nearest hundred and pay an even $200. This will help you make more than the minimum payment and it is a great option if you are not sure how much more you should pay. You will see that these few extra bucks you pay per month will add up over time and you will shorten your loan term before you know it (and save money on interest).
As with almost any loan, forgetting a payment or missing a due date means you will need to pay late fees too. To avoid giving away money like that, it is best to set up automatic payments through your bank account. At pre-set dates, before the deadline, of course, the amount of money you must pay the lender will be deducted from your bank account and sent to the lender’s account. If you have not set up payments through your bank account or do not have one, you can use your smartphone or a web calendar to set up due date reminders.
It is not necessary for you to make two payments each month. Just make an effort to pay extra at least once a year. Maybe you could use some of the additional cash you received as a work bonus or from your tax return to pay off your title loan more quickly.
Most of the time, people have an overwhelming impulse to spend more money until they have no more. Avoid giving in to temptation and opt for long-lasting joys over fleeting ones!
You can easily create your own amortization schedule using Excel (here is how) or traditional pen and paper and use it to find out what is the date of your last payment. Re-calculate your payoff date every time you make an extra payment. Watching the date getting sooner each time you make an additional payment is an excellent way to keep yourself motivated and not stray from your goal – to pay your auto title loan fast.
If you have some free time, there are lots of legit opportunities to earn some side money; money you can use to pay your loan. For example, you can drive for Uber or Lyft, sell photographs on iStockphoto or Shutterstock, work as a website designer or provide any kind of freelance work (check sites like Upwork), sell items and clothes you no longer need at apps and websites like Poshmark, rent a room in your house on AirBnB, test search engines (or videos or games or online stores) on sites like Swagbucks, take paid surveys, download apps that will give you money just for downloading and using them for some time, or even build your own online business.
This, of course, is the ideal solution. Therefore, get in touch with the lender and go over your payoff options if you have enough money to pay off your entire debt. While some (few) lenders would prefer to keep you in this debt situation and have you pay interest, the majority of lenders will gladly accept your payment.
You might be able to pay off the title loan and any other debt you may have if you have good credit by taking out a consolidation loan, which is a type of debt refinance. The idea is to reduce your total debt. As long as you follow the terms of your loan and make your payments on time, it won’t usually have an impact on your credit. Just ensure you work with a trusted company. Consideration should also be given to online peer-to-peer lenders in addition to credit unions and small banks.
It should be noted that debt consolidation is not the same as debt management or debt settlement. In debt consolidation, a company or person (usually a bank or credit union) buys all of your debt and you make one payment to them with a lower interest rate than what you had before. In debt management and debt settlement, a third party tries to negotiate lowers interest rates or lower principal balances respectively on your current debts.
This should be your last resort option, if, for some reason, you are no longer able to meet your monthly obligations (i.e. due to injury that will keep you away from work for a long time, or a divorce). Suppose your car is now valued at $12,000 and that you bought it new a few years ago. You got a $3,500 title loan but you are unable to pay back the amount you had borrowed. If you can sell your vehicle for $12,000 and then purchase a more modest (yet safe) used vehicle with $7,500, you will free up cash flow every month and have enough cash to pay off the title loan and any extra charges or fees. One thing that might complicate things is the fact that you do not have a clean title, given that the lender may have the title. Simply communicate with them and you will see that selling your vehicle even under these circumstances can be done.
What NOT to Do When Trying to Get Rid of Title Loan Debt
Some borrowers choose to simply stop making monthly payments. This is something we strongly advise you NOT to do. Defaulting on a loan, any loan, will hurt your credit. Apart from that, this enables the lender to legally take back your car. Thus, you’ll be left without a car and with a poor credit score. Plus, you will most likely still owe money. You can voluntarily give up the car to make things right, but don’t anticipate significant changes in the circumstances. Your credit score will continue to be low.
As for those that wonder, no, (fake) bankruptcy does not help either. You get to lose the car, no matter what. As a general rule, bankruptcy does not wipe out liens; only debts. In many cases, you must pay off the title loan so that you are able to keep the vehicle.
Ultimately, since the whole point of this is to repay your title loan as soon as possible, you won’t be able to accomplish your goal by using personal expenses as an excuse. You will need to make some minor sacrifices, at least during the duration of your title loan. For instance, you can temporarily substitute Netflix for cable. That will enable you to save enough money to pay off your debt quickly. Additionally, if you develop this habit, it’s likely that you won’t ever need to incur debt of any kind!
FAQ
Can you negotiate a title loan payoff?
If you can show that you are in need of money and that you are unable to make the current payments, your lender might be open to negotiating. Ask for a longer loan term, a lower interest rate, a lower monthly payment, or a combination when negotiating. Verify your ability to pay the new terms and obtain all information in writing.
Does TitleMax settle?
SACRAMENTO: TitleMax of California, Inc., an auto title lender, and the California Department of Business Oversight (DBO) today completed a settlement. , continuing a three-year crackdown on illegal consumer loans.
What happens if you default on a TitleMax loan?
In order to repay your loan, your lender may reclaim the property and sell it. Any amount that is not repaid may be your responsibility to pay by selling the collateral.
Does TitleMax offer refinancing?
When refinancing, TitleMax® considers the value of your car in addition to your current loan. In general, we are able to refinance any title loan that has already had roughly 2020 percent of its principal paid down. You might be able to save a lot of money and have your loan paid off sooner!
Read More :
https://www.titlemax.com/faqs/how-to-pay-off-a-title-loan/