Debt is nothing new for Americans as we hear about it every single day in news headlines. The true reality is that most citizens can't even afford an unexpected expense of $500 if the need arose. That's easily an emergency medical bill, the cost of a broken appliance, or an emergency plane ticket. Lenders are now aware more than ever of borrowers' potential to default on loans and many have made their loan credentials even stricter than before.
These stricter credentials are leaving most of the American public in the dust when it comes to getting financing through a traditional bank. Many are turning to short-term lending options where they put their own collateral up in exchange for the loan amount. These lenders have very lenient loan credentials as they are using the collateral to secure the loan in the case a default occurs.
Texas Car Title Loan Debt For Easy Cash
Texas car title loan debt is one very convenient way that consumers are getting the emergency cash they need. It's a very simple process that offers same day or next day funding. Borrowers simply fill out an application complete with their contact details and the type of vehicle they have. The lender gives them an estimate for the loan amount based off of the value of the car.
If the borrower agrees to the loan terms, they simply allow the lender to take possession of their lien-free vehicle title. In exchange, they are given the cash they need. At the end of the loan term, the borrower is expected to pay the lender for the principal loan amount plus the interest that accrued on the loan. Once the loan is paid off, the lender returns the vehicle title to the borrower.
Well, this is how the car title loan process is supposed to work when the borrower follows through on their commitment. Unfortunately, paying off a title loan in Texas is not the easiest thing to do for those suffering financial hardship. As many as one in five individuals who take out a single payment Texas car title loan debt end up getting their vehicle repossessed due to non-payment.
What Happens When You Can't Pay Your Loan
Most car title loans are setup for a term of 30-days. If you are unable to make the full payment for the principal and accrued interest, you will have the option to roll over the loan into a new one. Before a roll over can happen, you must pay the interest that accrued on the initial loan. Once the interest is paid you can roll over your title loan into a new loan for another 30-day period. Borrowers can roll over their title loan for a maximum of five times before they must pay the entire loan amount off.
For example, let's say you take out a title loan for $500. You agree to pay back the $500 principal plus $125 in interest charges at the end of the 30-day term. At the end of the 30-day term, you find that you don't have the complete $625. You can pay your lender a payment of $125, which covers the cost of the interest that accrued during the initial term and have another loan for the initial $500 roll over. If you think you are being charged more than your initial contract states, be sure to check out the overcharge assitance for Texas title loans for more.
When Do Repossessions Occur?
In the case that you don't have any money to pay the interest on your title loan, the lender has the right to repossess your vehicle. Under Texas laws, the lender can repossess a vehicle within one week after the borrower misses a payment. The quickest of the repossession will be specified within the title loan contract you sign with the lender.
The lender doesn't have to provide advanced warning to the borrower about the repossession. The lender doesn't need a court order to repossess a vehicle. In most cases, the lender will require that the borrower gives them a set of keys to the vehicle when they take out the loan. The repossession representative is legally allowed to go onto your private property to repossess the vehicle.
When a lender repossesses a vehicle, they will put the vehicle up for auction. In the case the lender didn't require you to give them a set of keys up front, they will have the car re-keyed. This re-keying fee, as well as the auction fee, will be added onto the amount of the title loan that you owe.
The proceeds that are made from the sale of the vehicle are used to pay the title loan amount. Any surplus that is left after the payoff of the title loan is for the lender to keep. In the instance the vehicle sale doesn't cover the entire cost of the title loan, the lender may still seek legal action against the borrower for the remaining difference. If you need help with title loan repossession you can visit the FTC.gov website.
Other Options To Payoff Your Title Loan Debt
If you are having trouble paying off your car title loan, there are some options that can help to keep your vehicle from getting repossessed. Most borrowers can try to refinance their title loan with a different lender. Local banks and other car title lenders do offer refinancing options. The goal is to refinance the loan at a lower rate so you can afford the payments.
In reality, you should try to speak to your car title lender to see if they can set up a payment plan that works for your budget. Lenders tend to be more willing than borrowers think to work with them. Remember that lenders will have to pay upfront for a repossession fee and re-keying fee. They can avoid doing this by working out a repayment plan with the borrower. It's definitely worth a try.