Title loans can provide much-needed financial relief during a difficult time, especially if you can't qualify for a traditional bank loan or you need cash quickly. Despite these benefits, if you choose the wrong title loan provider or you aren't able to pay back your loan on time, it can be easy to get stuck with a loan you can't afford. When this happens, title loan relief assistance is available to help you climb out of a difficult financial situation and get back on track.
What is Title Loan Relief Assistance?
When you realize you will not be able to pay back your car title loan on time, your first course of action should be calling your lender to ask about a hardship option. Many lenders help struggling borrowers by restructuring the title loan. In most cases, your loan will only be restructured temporarily to help you catch up on payments and avoid repossession.
If this option is not available or you want a more long-term solution, you can also choose to refinance your title loan. At Texas Car Title Loans, we can pay off your existing title loan and replace it with a new loan. Just as with a mortgage refinance, this option comes with clear benefits:
- Lower interest rate. Bring in your current title loan contract and we will offer a new loan at a lower interest rate. This means you will pay less over the course of your loan.
- Lower payments. With a lower interest rate, your monthly payment will also be lower and your loan will be more affordable.
- Avoid repossession. Owe title loan money in Texas and facing repossession? By refinancing your title loan, you can get a fresh start with a new company and avoid vehicle repossession.
To refinance a car title loan, you will need the same documents as if you were applying for a new loan, including a Texas driver's license or ID and documents related to your car. You will also need your current title loan contract. Ask your lender for a payoff amount for your existing title loan, which will likely only be good for a few days.
Important Title Loan Laws in Texas
It's also essential that you understand your rights under Texas law. Texas does have looser title loan requirements than most states, but there are several laws in Texas designed to protect borrowers who take out title loans.
Texas law has no cap on the amount a consumer may borrow with a title loan, but there is an interest rate cap of 10% with no fee limit. The average cost for a title loan in Texas is 277% APR as title loan providers have an exception to the interest rate cap: they can register as a Credit Access Business (CAB) to broker loans between lenders and consumers. The average Texas title loan costs $21 per $100 borrowed with an average term of 29 days. Understanding this, you can negotiate for a better rate, especially when you are requesting Texas title loan relief assistance.
If you fall behind on your title loan, it's important to take action right away to avoid repossession as Texas law allows a vehicle to be repossessed even if the borrower is only "late." This means a car can be repossessed just 1 week after the borrower misses the payment due date without a court appearance or advance warning. Because repossessing a car is expensive, most title loan providers are willing to work with a borrower who has defaulted instead of resorting to repossession.
Remember that not all title loan providers are equal. You can avoid overpaying in the first place by comparing loan options among several lenders to choose the best terms. Make sure you compare not only the interest rate but the term or length of the loan, any hidden fees you may incur, your options for paying back the loan, and what options the lender provides if you are unable to pay the loan.
How to Refinance Your Title Loan
If you have decided that refinancing is the best option for relief from a loan you can't afford, follow these easy steps.
- Identify your loan terms. You will need to know your loan term, interest rate, payment amount, and your payoff amount.
- Compare lenders. Don't pick a random lender; take the time to compare quotes from several title loan providers based on how much they will lend you (make sure it covers your payoff amount!), the interest rate, the loan term, the payment amount, customer service ratings, and any service fees you will pay such as overdue and document fees. Make sure you choose a lender that will give you a loan that at least covers your current payoff amount and gives you a lower interest rate and payment.
- Apply for a new title loan. Because your vehicle title is still in the possession of your existing lender, make sure you inform your chosen title loan lender before applying for a title loan. This way, your new lender can pay off your existing loan on your behalf.