Collection on Title Loan

If I default on a title loan can the lender repossess my vehicle?

I put my car title as collateral on a loan. I have been experiencing financial difficulties and have not made a payment in 45 days and they have issued a warrant in debt for me. They have made no attempts to repo the car but they still have the title. Do they have to repo the car first and then hold me responsible for any remaining balance if any? If not why won't they give the title? Do they have to get the judgment before they can repo the vehicle even though they already have the title?

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Bill's Answer
(21 Votes) Team

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  • Avoid a title loan if possible.
  • Title loans come with a high APR.
  • Repossession is probable if you fail to pay a title loan.

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.

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If you are struggling with debt, get a no-cost, no obligation analysis of your debt options from a pre-screened debt relief provider.

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.

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  • JW
    May, 2014
    Took out a $5,000 title loan last year in Missouri, and have missed several payments. The car is worth much more than the loan I took out. Can I get arrested or a warrant placed on me? I lost my job right after getting the loan and have yet to find employment. The vehicle is no longer working, just sitting. Embarrassed to call them. Any advice to offer?
    0 Votes

  • AT
    May, 2014
    I defaulted on a title loan I got in Virginia 7 years ago. I have since moved to Michigan and finally called the lien holder. She agreed to settle for 20%, which is good news. My question is since I am out of state and I cannot walk into the office and trade the money for my lien release, how can I be sure once I send the money, that I will actually get the title and she is not going to just apply it to my total loan as a payment? I know these places can be tricky. Can I request she fax me a letter with the agreement we made as proof before I send the money? What should I say or do?
    0 Votes

  • FD
    Apr, 2014
    i live in georgia and my car costs way more than the title loan. my job relocated and now i cant afford to pay the loan. 2 questions, will they repossess the car or file a law suit?...if the sell it will they give me the extra money??
    0 Votes

  • HH
    Apr, 2014
    I took out a title loan for a rough estimate of $1,250. I paid my monthly payment on time every month. I had some financial issues happen back in February and as a single mother my main concern was paying my rent and utilities to make sure my child was warm and not homeless. I forgot about my payments and missed February and March for a total of $510. I received a letter April 3rd stating if I did not pay them the full $510 by the 7th I would have defaulted my loan and I would have to pay back the full initial amount and my file would be sent to proceedings in court and I will be responsible for all fees.

    My question is, do I only owe them the amount they lent me or do I owe them the whole amount with the interest rate and all that (I believe over the term it added up to $3,000 something)? Also since they tried serving me papers does that mean my car is now out for repossession? If I just let them take the vehicle do I have to pay them any money since my loan amount is less then my car is worth? Like I said, I'm a single mother and barely making it now. I don't have $1,300 to give them but I could come up with maybe $600 if I had to.

    I'm scared to call them and see what I can do because I've heard such nasty things about the customer service and the way people are treated by them if you default your loan.

    I live in Wisconsin.
    0 Votes

  • MP
    Apr, 2014
    I live in Georgia. I own my car and I'm having a hard time selling it. The value of my car is about $4,000. I would like the money to go towards another car. My sister told me she took out a title loan for a vehicle she no longer wanted and surrendered the vehicle to the tittle place here in GA. She said nothing was put on her credit and she didn't have to pay anything back, she took the money and they got the car. She did this twice. My question is do you think this is a good idea for me to do. Im thinking about taking out a $5,000 tittle loan and surrendering my car. Will this affect my credit? Will I end up owing anything. Will I just be screwing myself over?
    0 Votes