What Happens if You Can’t Pay Your Title Loan?
Too often, financial catastrophes happen that we never could have predicted. An accident, a cancer diagnosis, or a job loss can cause situations to go from bad to worse in the blink of an eye. It is in those times that we might turn to title loans hoping for a miracle.
Having a financial emergency is a stressful experience. Most of us don’t have a significant amount of cash sitting around and we don’t want to ruin our credit. A payday loan could provide quick cash until your next payday.
But what happens if you can’t pay your title loan?
What Happens if You Can’t Pay Your Title Loan?
If you don’t pay a title loan, the lender can put a lien on your vehicle. This means they can take your car if you don’t make your payments. This can have a negative impact on your credit score, making it harder to get a loan in the future.
The lender may also report the delinquent loan to the credit bureaus, which could negatively impact your credit score as well.
Your life will be difficult in a number of ways when you have a bad credit score. One impact is a possible delay in your retirement, which would even cost you more money in the future. There’s still a chance for your credit score to improve, but it will only be possible if you understand its impact.
If you have a bad credit score, and you are renting, you may have a hard time looking for an apartment in the future. According to Experian, a credit score of 620 is often the minimum you need to qualify for an apartment.
There are ways to improve your credit score. The first is to pay down your revolving credit as much as possible to lower your credit utilization percentage. Next is to have inaccurate reports removed (especially late payments).
You can also have someone add you as an authorized user to an old account with a perfect payment history, ideally with a low utilization rate. This can be done by a friend or relative, and they do not even have to give you the card.
The Harsh Reality of Repossession
If you don’t pay back a title loan, the lender can repossess your car. This means they can take back your vehicle and sell it, using the money from the sale to pay off your loan.
If you don’t have a vehicle, you may be unable to get to work and earn a living. You may also be charged late fees and additional interest, which can make it difficult to pay off the loan.
If the lender sells your car for less than what you owe on the loan, you will be responsible for paying the difference.
The Cycle of Debt
The cycle of debt is when you can’t pay your debts, so you incur more debt to try to pay off the original debt. This is because you may have to take out another loan to pay off the first one, and then you may end up with even more debt.
This can be a difficult cycle to break, and it can be very expensive. You may end up paying a lot of money in fees and interest, and you may end up losing your car. If you’re struggling to pay back a title loan, it’s important to check on some title loan tips or talk to your lender and try to find a way to make payments that work for you.
The first step to getting out of the debt cycle trap is acknowledging that you have too much debt. You just need to take a realistic view of the situation so you can start taking action.
If you have a number of outstanding debts, you can also consider taking out a debt consolidation loan from a bank or credit union and paying off all of them.
Once you recognize your need to get out of debt, you can start working on solutions.
The Risks of Falling Behind on Payments
Title loans are appealing because you can arrange the loan quickly. Also, the lender will not check your credit history so you can receive the title loan regardless of your credit score.
A title loan is ideal for those who may need a sum of money quickly and a way to cover an emergency financial problem, such as hospitalization, etc. You may visit georgiatitleloans.com.
Title loans have to be quick, usually within 30 days or less after getting the loan. If you can’t repay the loan by then, you can roll it over to the next month, but you’ll be charged another monthly fee which will happen each time you roll it over.
Also, if you are absent from consenting to a headline mortgage, you should be versed in the risks before you start. Headline lenders are not regulated by the government and may sue you or garnish your wages if you don’t repay the debt.
Some lenders may also employ aggressive collection tactics, such as making threatening phone calls or showing up at your home or work.
Possible Legal Implications
If you don’t have a vehicle, the lender may try to collect the debt from you through other means, including suing you. If the lender sues you and gets a judgment against you, the lender may be able to garnish your wages or put a lien on your property.
If the lender wins the lawsuit, you may be required to pay the lender the amount of the judgment, plus court costs and interest. You may also be responsible for the lender’s attorney fees.
Contact Your Lender as Soon as Possible
It is very important that you are aware of what happens if you can’t pay a title loan back. If you’re having trouble making payments, contact your lender immediately to discuss your options.
Without doing so, it can lead to a number of problems, including damage to your credit score, the loss of your transportation, and potential legal issues.
For more informative articles on financial counseling and debt collection resources, visit the rest of our website today.
