A "title loan" offers the consumer cash from the lender in exchange for the title of a paid-for vehicle to secure the loan. (The titled property can be a passenger vehicle, motorcycle, boat, or airplane.) Typically, these loans are due back in full 30 days later. There's no credit check and only minimal income verification. The fees range from $80 to $100 for a loan amount of $500. The annual percentage rate (APR) on these loans can be as high as 250%. By federal law, title loan lenders must disclose the interest rates in APR terms, but it is common for title lenders to hide the APR in favor of a monthly rate, which appears less usurious. Many states regulate title loans.
It is common for title lenders to accept interest-only payments for an extended period of time, which causes the consumer to in a very short period of time pay more in interest than the amount borrowed. The lender has the right to repossess the titled property if the consumer defaults on the loan.
Because of the very high interest rates and stiff fees and high risk for losing a vehicle they have paid for, consumers should avoid title loans.
Importance of State Laws
Regarding your question, "Do they have to repo the car first and then hold me responsible for any remaining balance if any?" The answer to this question depends on the laws in your state of residence.
Here is the worst-case scenario: For the sake of argument, let us say that the vehicle has a fair market value of $1,000 and that you got a title loan of $400. Let us also assume that you repaid the creditor $0. The creditor has the right to repossess the vehicle, sell it, and if there is any balance left over after paying the interest, balance, and auction fees, you will receive that surplus.
Now let us change the facts and say that for the sake of argument that the vehicle has a fair market value of $1,000 and you got a title loan of $3,000. Let us assume again that you repaid the creditor $0. The creditor repossesses the vehicle and sells it for $1,000 and tacks on $500 in fees and interest. You would be liable for the deficiency balance of $2,500.
Regarding your question, "Do they have to get the judgment before they can repo the vehicle?" the answer is "maybe" and is dependent on your state of residence. In some states the creditor being on the title gives them the right to repossess the vehicle. The vehicle is, after all, in the creditor’s name. In other states lenders will not take possession of a vehicle but instead file a lawsuit to collect the balance due plus court costs and finance charges. You did not mention your state of residence, so it is impossible for me to say what your rights are in your state.
I hope this information helps you Find. Learn. Save.
Best,
Bill
Lake City, SC | May 22, 2012
May 22, 2012
Grand Terrace, CA | April 04, 2012
April 05, 2012
Indian Springs, AL | March 04, 2012
March 05, 2012
January 26, 2012
January 29, 2012
You can try speaking with your state's Attorney General's office, consumer protection division, but I am not sure that they can do anything to help you.
Bartlett, TN | January 14, 2012
January 15, 2012
Houston, TX | September 06, 2011
September 06, 2011
Houston, TX | September 01, 2011
September 01, 2011
I am not clear if you are speaking about two separate loans, a payday loan and a title loan. If that is the case, then the title loan is a lien on your vehicle and the payday loan is not. The payday lender, in this case, could sue you and come and pursue collections if it won a judgment against you, but can't take your car.
Nekoosa, WI | August 17, 2011
August 18, 2011
I suggest that you consult wtih an attorney in WI, to see your delinquent loan could lead to a seizure of your vehicle and a forced sale, which is not quite the same as repossession.
Bloomington, IL | July 14, 2011
July 14, 2011
I can't find a time limit they are required to give you for a grace period on a missed payment, before they come to take your car. You should do everything you can, in my opinion, to get the money to pay them withiin the 3 days, such as borrowing the money from another source.
Hamilton, TX | July 10, 2011
July 11, 2011
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