When you need some cash fast to get out of a tight financial situation, a car title loan can seem like just the solution. However, getting out of one can be a challenge. If you take out a large loan, it’s tough to make the complete payment in the typical 30-day term. So you end up paying interest month-after-month just to avoid losing your car.
If you’re tired of losing your money on a seeming never-ending car title loan, you’ve come to the right place. I’m going to let you in on a secret that lenders don’t want you to know: how to get out of a title loan so you can stop throwing away your hard-earned money. Through tact and negotiation, you can break free of the title loan that has you bogged down.
Hit Title Loan Lenders Where it Hurts them Most
In order to be successful, you first need to know something about lenders, something that’ll empower you to take the actions that will help you get out of a title loan. The secret is: lenders are only human. That’s a shocking revelation, isn’t it?
While you may say that’s painfully obvious, the truth is people usually don’t act like this is the case. Usually, people treat lenders like omnipotent entities to whom they’re totally and completely subjugated.
The lender-borrower relationship seems to be one that empowers the lender. After all, they have a contract that says you’re obligated to pay them a set sum of money. If you don’t they have the legal right to take your car and even take legal action. It seems pretty clear that the power dynamic is unevenly balanced toward the lender’s side.
The key to how to get out of a title loan is to turn this dynamic around. Take control of the situation. How do you do this? By appealing to the lender’s common financial sense.
The lender doesn’t want to lose money. He’s out to make a buck and he’s not going to take actions that will only prove a loss for the business.
While repossession and lawsuits are the common threats leveraged against you for failure to make title loan payments, the truth is that these actions aren’t always feasible for the lender.
If your car has a low value and your loan amount was for a small sum—say in the hundreds of dollars range as opposed to the thousands—the probability is that going through the trouble of repossessing and reselling your car, as well as taking legal action against you, would be too costly to the lender to be worth the trouble.
It’s in situations like these that you’re poised to negotiate. By managing the situation correctly, you can strike a deal with the lender that makes paying off the loan more manageable.
Here’s what to do:
How to Turn the Tables on the Lenders and Negotiate
First, you need to figure out exactly how much you owe on your title loan. You can contact the lending institution directly and/or consult all the paperwork related to your loan.
Next, you need to calculate the market value of your car. Doing so will allow you to determine how much the title loan company stands to gain or lose by pursuing the present loan terms. If you discover that your car’s value is relatively low, you have room to negotiate.
Contact the lender and make a settlement request. Usually, it’s useful to do this in the form of a letter. Here’s where you make your case. Aside from the obvious information like how much you initially borrowed and how much you owe, you should offer an explanation as to why you’re unable to pay the loan.
Drawing sympathy is always an effective form of persuasion. Offer compelling reasons that keep you from making the current payments as they stand. If there are accidents, illnesses, or job losses involved, make a note of them. However, if these don’t exist, don’t make them up.
Be prepared to be rejected. Most lenders will decline your settlement offer the first, second, maybe even third time. Be persistent.
Haggle Smart with Title Loan Lenders
When the lender sees the futility of pursuing the present terms, he’ll come around and accept your negotiation offers. Here’s where you need to be smart. Don’t let the lender set all the terms. Take the initiative and negotiate like a pro.
First off, the burden is on you to make the initial offer. Be realistic and don’t sell yourself short. After doing some research and considering your financial situation, decide what you can honestly offer. You don’t want to overburden yourself again.
Based on your analysis, make an offer that is considerably less than what you’re actually able to pay. Remember, the lender is going to try his best to set the price high. It’s best to start as low as possible so that you give yourself some wiggle room.
After the typical back and forth, you hopefully come to a mutually beneficial agreement. You’ve done it! Now it’s time to get the whole thing in writing. Without an official, written settlement agreement between you and the lender, the lender can hold up the original loan contact and come at you with the full weight of the law.
Make sure the new contract nullifies the terms of the first one. If you’ve gotten to this point, you definitely deserve a pat on the back. It takes a lot of hard work and persistence, but this is how to get out of a title loan in many cases. Doing so will allow you to take a huge breathe of relief at having a more manageable loan that you can pay off quickly.
However, maybe you need help negotiating process. A lot of lenders out there drive a hard bargain. Maneuvering the situation can be tricky. If you find yourself in a jam and feel like you could use extra leverage to obtain a settlement, contact a debt settlement company.
Lenders often feel more pressure when a third party in the form of a full-fledged business is brought it.
What to Consider when working with a Settlement Company
Although a debt settlement company can guide you in how to get out of a title loan and provide leverage, there are also numerous things you need to be careful about when employing the help of one.
Debt settlement companies often motivate you to stop making direct payments to the lenders. They encourage this because it gives the lender increased incentive to negotiate with you. After all, why should a lender accept new terms if they’re making regular money off your payments every month? However, you should take into account that avoiding payments will likely cause in reporting to the credit bureaus that will have a negative impact on your credit score.
Often debt companies ask you to set money aside to a special account for a prolonged period time (such as 36 months) in order to accumulate the funds used in paying off debt. Making these regular settlement payments can be overwhelming for you. It’s important to do research and know beforehand what you will be paying so that you can budget accordingly. You don’t want to abandon a half-completed settlement plan.
There are many legitimate settlement companies, but there are also many that may try to scam you. Some of the tell-tale signs of a scam company are charging fees before your debt is settled, promising an end to all debt collection calls and legal action, and promising paying off of debt at miniscule prices that are too good to be true.
Before selecting a loan settlement company, do the proper research and check the company with the Better Business Bureau. See what past consumers have to say about them.
What do I do if I Have an Extremely High Debt?
The above method works best if you owe a smaller amount—that is, if what the lender stands to gain is less than what they will spend going through repossession procedures and legal action.
But what if the opposite is true? Let’s say you have a title loan out on new car worth tens of thousands of dollars? In such a case, you have less likelihood of striking a deal with the lender because they’re poised to earn more from pursuing your payment of the loan.
If you find yourself in such a situation, this is how to get out of a title loan: through refinancing. With refinancing, you work with a new lender to get better terms and rates on an existing loan. The new lender assumes the old debt but gives you a new deal. Maybe lower interest rates. Maybe a more accommodating repayment plan. Maybe a combination of both.
How to go About Refinancing a Loan
Just like with debt settlement, there’s a process you need to follow to refinance a car title loan.
First, you need to get your paperwork together. That includes a copy of the original loan agreement, vehicle inspection certificate, and the title. If that’s the case, get in touch with the lender and let him know what you are planning to do. He can allow you to make the necessary arrangements to get the documents you need.
You also need to talk with your lender and request a quote indicating how much you money you need to pay to eliminate the loan completely. Keep in mind that these quotes are usually good for only a couple of days, so ask the lender how long the quote will be valid for.
Then, check your credit. Knowing your credit score will allow the new lender to see your options. After that, it’s just a matter of selecting a repayment plan offered by your new lender.
Help from 1800 Loan Store
This whole process can be tricky. That’s why it’s good to have help. If you want to know how to refinance and how to get out of a title loan, we can help you.
1800 Loan Store has a network comprised of the top lenders in the nation. We’ve sifted out the bad ones and only include those who offer reasonable terms and conditions. When you find a refinancing lender through our loan matching system, you can be sure you’re getting low interest rates and a favorable repayment plan.
The advantage of our system is the speed with which you can get quality refinancing for your title loans. You’re instantly matched to the lender whose services and offers meet your specifications. The application process online and over the phone only takes a few short minutes. You can be ready to go the same day you apply.
To get started, apply by filling out the online application form on this page. You can also call us. We quickly send you a quote. Then, one of our loan officers calls to answer your questions and guide you step-by-step through the process.
There’s no need to lose time going from lender to lender to placing call after call. With just a couple clicks, you can find the loan solution that’s right.