What Happens If You Default on a Title Loan?

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If you missed a payment on your car title loan, you may be worried about defaulting on the loan. At Max Cash® Title Loans, we strive to educate you on the dangers of defaulting on a title loan, and what you can do to prevent loan default.

How Many Missed Payments Leads to Default on a Title Loan?

Defaulting on a loan means that the borrower has failed to make payments on the loan. Depending on your state, this could be after 30 days, or after 90 days. All loan contracts subjected to those specific state laws and regulations on default timeframes.

Regardless of the time frame, defaulting on a title loan could mean that your vehicle is repossessed in the future. While that does not always happen, it is important to understand the ins and outs of defaulting on a loan to prevent repossession from happening to you. If you are currently falling behind on loan payments in the repayment process, you have a few different options and resources to review! 

what happens if i don't pay my title loan
Finance manager of the car showroom is calculating the cost of reserving a new car for the customer while signing a car purchase contract.

What Happens if I Don’t Pay My Title Loan Back?

If you are wondering, “What happens if i don’t pay my title loan?” Here’s what you need to know!

If you fail to make your title loan payments as agreed, the lender may have the legal right to repossess your car. This is because when you take out a title loan, the lender will place a lien on your car’s title. This lien allows them to seize the vehicle if you default on the title loan. In most cases, the lender will attempt to repossess your car as soon as you miss a payment. Therefore, it is important to contact your lender if you are unable to make a payment and try to come up with a solution before the lender takes action. If your car is repossessed, you may have to pay additional fees and costs, and you may still be responsible for paying off the remaining balance of the loan. It is best to avoid defaulting on your title loan if at all possible.

Vehicle repossession typically involves the lender hiring a repossession company to take possession of the car. The repossession company will typically track the car. When they find it, they will tow it to a secure location, such as a storage facility. The lender will then sell the car at a repossession sale, with the proceeds going to pay off the remaining balance of the loan. If the sale of the car does not cover the full amount of the loan, you may still be responsible for paying the remaining balance. Vehicle repossession can have serious consequences, including damaging your credit and leaving you without a car.

Business woman sitting at a desk with a planner and morning breakfast after looking into title loans in Brattleboro

What Happens to My Credit if I Can’t Pay My Car Title Loan?

Defaulting on a loan can also mean your credit score will go down. If your title lender reports your payment behavior to the major credit bureaus, it will leave a mark on your credit history. If you apply for a type of unsecured loan such as a personal loan, payday loan, or credit card in the future, you could be denied due to poor credit. Credit bureaus will report defaulted loans, and it can stay on your credit history for a while.

What to Do If Your Vehicle is Repossessed After Loan Default

If your vehicle is repossessed after a loan default, you have options. The first is that you may be able to reclaim the vehicle before it is sold by paying off your loan in full. If you aren’t able to do so, the lender is legally able to sell the car without your consent. If the sale settles the debt, you could be entitled to extra money. However, if the sale failed to satisfy the debt, it could mean that you still owe money after vehicle repossession.

Before looking at any options, however, you should first reach out to your title loan lender, and explain any financial hardship you might be having. Most lenders will consider working with you and could offer a new payment plan to help you from losing your vehicle. Communication with your lender is the most important part to prevent yourself from defaulting on a loan after you have become delinquent!

What Can I Do To Avoid Loan Default and Pay My Title Loan?

Here are a few tips to avoid loan default:

  • Look at the Terms: One way to avoid defaulting on a title loan is to ensure that you fully understand the loan terms before you sign. This means reading the loan agreement carefully and asking the lender any questions you may have. It’s important to make sure you can afford the monthly payments. Otherwise, you know what will happen if you can’t make a payment.
  • Budget: Another way to avoid defaulting on a title loan is to budget carefully and ensure you have enough money to cover your expenses, including your loan payments. This may mean cutting back on non-essential expenses or finding ways to increase your income.
  • Communicate: If you find yourself in a situation where you can’t make your loan payments, it’s important to contact the lender as soon as possible. They may be able to work with you to come up with a solution, such as refinancing the loan or extending the repayment period.

Refinancing your Title Loan

If you are facing loan default, one of your smartest options to consider is refinancing the loan. Refinancing a loan could mean lowering the interest rate, and helping you save money in the long run. Many borrowers will refinance their loan to combat high interest rates, or lower their monthly payment to something more affordable. As a borrower of a title loan, you also have the option to refinance with a different lender.

That’s where Max Cash Title Loans can come in and make your life easier. Through Max Cash®Title Loans, you have the option to refinance your existing car title loan through us!

How Can I Apply for Title Loan Refinancing?

Bottom line, as much as you might think you’re out of options, you are not alone if you default on a title loan. Take a deep breath and gain clarity about your specific situation. If it’s a short-term situation, the borrower may be able to ask for an extension on your payments and or adjust your monthly payments by negotiating with your loan provider. 

If the borrower needs a longer-term solution caused by a life event, this may require a more extensive solution. Often, you can refinance your loan and extend the term to lower the payment or consolidate debt to free up some room in your budget. 

Max Cash Title Loans Can Help!

Contact the title lender to let them know about your situation as soon as you can. The longer you wait to give them a call, the more debt, late fees, and expenses can accumulate, but it’s never too late to have an honest conversation.

Remember, you can only refinance your current title loan if your loan account is in good standing. Take action before you default on your loan! To apply for title loan refinancing, you will typically need to provide the following information:5

  • Your contact information, including your name, address, and phone number
  • The make, model, and year of your car
  • The current outstanding balance of your title loan
  • Your income and employment information
  • Your Social Security Number
  • Proof of insurance for your car may be required

You may also need to provide additional documentation, such as a copy of your car title and proof of your ability to make the new loan payments. The specific requirements for refinancing a title loan can vary depending on the lender and your individual circumstances. It is best to contact the lender directly to discuss what is needed to apply for refinancing.

If you are interested in refinancing your current title loan, call a Max Cash Title Loan agent at 855-562-5626 today! They can walk you through your options and discuss the new loan terms with you if you qualify.5 The process to refinance a title loan is similar to applying for one. It doesn’t have to be complicated, and you don’t have to jump through hoops!

With Max Cash Title Loans, you can take advantage of:

  1. A Free Application Process
  2. A Quick Way to Get Connected to Title Loan Refinacing5
  3. Easy Approval5
  4. And Keep Your Car While You Pay Off Your Loan!

Click here to learn more about what Max Cash Title Loans can do for you! 5