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Published On: Sun, Oct 15th, 2017

5 Ways to Get Rid of a Title Loan or Clear It Off

Title loans are like that comfortable bed which is easy to get into but eventually, you have to get out of it. These loans are highly expensive and linger on a lot longer than you usually anticipate. They also carry risks as in some cases; you might have to lose your car.  Below we discuss five ways to get rid of it or pay it off.

photo supplied/ bankruptcydocumentslibrary.com/

The Ideal Situation

Obviously, the simplest way is to pay back your loan. If you’ve got some cash and can reimburse, ask your lender about the payoff conditions and instructions. Needless to say, it won’t be ideal. Many lenders will readily take your payment; however, some title lenders drag their heels and want that you keep paying interest.

Exchange the Car

In case you haven’t got enough funds, you can sell your car to have cash. Selling might give you a hard time if the car doesn’t have a clean title, yet it is possible and happens all the time. Downsizing to a low-cost car will save you hundreds if not thousands in interest and expenses, and release cash from your income every month.

Refinance a Title Loan

Another approach to dispose of your title loan is to refinance a title loan. This doesn’t take care of the fundamental issue (that you’re short on money) but it does help in some way.

A fixed rate loan from an online lender, bank, or credit union will practically be more affordable than extending your title loan month after month.

If you face trouble obtaining a replacement loan, consider visiting small banks and credit unions which are the easier options for getting your loan approved. Online lenders are also a good option to consider. As a last resort, someone you know may be willing to co-sign and get you approved.

Negotiate

If you have been regular at repaying, chances are your current lender might be ready to negotiate. Give an offer that you can bear to pay. Your lender might accept it, particularly when your accounts are out of hand and you may be totally bankrupt. Your lender might offer you a few options such as, lowering interest rate or other accommodations that can bring down your installments.

In case your lender consents to receive lower than you owe, your credit will be affected. Not just your credit scores will be lower for many years, but borrowing will become problematic and expensive for you during that time.

Filing Bankruptcy

The Devil exists in the details, so it is advised to consult a local attorney and communicate your situation. In several cases, bankruptcy gives off restricted relief from auto title loans. This option would save you from being liable for deficiency judgments; however, the car will continue to act as collateral for the loan and can be taken in case one is unable to repay.  

Establish an emergency savings fund of 3 to 6 months’ expenses and increase your credit so that there are more choices for you when you have to borrow.

Author: Shan Ge

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