Tiffany Lashai Curtis is a lead writer for the core personal finance team at NerdWallet. Hope the sale proceeds are enough to cover your remaining loan balance if theres still a balance (called a deficiency balance) youre also responsible for paying it. In most cases, this process is a very simple one that requires making payments on time and making sure that, once the debt is settled, the title loan company properly reports the activity and removes the lien on your vehicle's title. The second thing to consider is how it affects your credit score. Even when things arent dire, you might find that your lender has options available. When you pawn your car title, you get a cash loan which you will pay back at an interest rate. You can typically only get a title loan if you own the car free and clear. This is different from a foreclosure, which is when the property is taken away from you involuntarily. Among other protections, the MLA prevents service members from being charged an interest rate of more than 36% or being assessed a penalty for repaying a loan early. Chapter 11 or Chapter 13 Bankruptcy Can Help. For those who are unfamiliar, a voluntary surrender is when you voluntarily give up your leased car or leased property. Written by Chiara King.Updated November 28, 2021, Car title loans are a quick and easy way to get cash in a hurry by using your vehicles title as collateral. Many lenders are willing to work with borrowers who are struggling to make payments, and may be able to offer alternative payment plans or extended repayment terms. The lender may then sell the car and apply the proceeds to the amount you owe on the loan. The lender will then place a lien on your car's title. - In Tennessee, TitleMax offers title pledges, and secured and unsecured Lines of Credit ("LOC"). Some lenders allow you to voluntarily surrender your vehicle to close out your loan. To get a car title loan, you must give the lender the title to your vehicle. After you surrender your car, the lender typically puts it in storage before its sold privately or at auction to try to recover the loan balance still left on the vehicle. Its usually capped at 25% to 50% of the vehicle's value. Refinance your car loan. Get a better interest rate and lower payment. We believe everyone should be able to make financial decisions with confidence. Car title loans, often just called title loans, also are short-term loans. Car title loans are a way to get cash in a hurry using your vehicle as collateral. Just make sure they understand and are willing and able to take on the risk of paying off the loan in the event you don't. The offers on the site do not represent all available financial services, companies, or products. Disclaimer: NerdWallet strives to keep its information accurate and up to date. For example: if your car sells for $5,000, but you owe $8,000 on your loan, you still owe the lender that $3,000 plus additional fees associated with the surrender. Before taking out a car title loan, research your particular state's requirements and restrictions for these types of companies. For this reason, lenders may consider a voluntary surrender to be slightly less negative than a repossession. Tiffany Lashai Curtis is a lead writer on the personal finance team. NerdWallet Compare, Inc. NMLS ID# 1617539, NMLS Consumer Access|Licenses and Disclosures, California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812, Property and Casualty insurance services offered through NerdWallet Insurance Services, Inc. (CA resident license no. There are 17 references cited in this article, which can be found at the bottom of the page. "Obtaining a Lien Release on a Vehicle: What You Need to Know. My answers to questions posed on this site is no substitute for obtaining legal advice from competent local counsel. When a lender repossesses the vehicle, they may send someone in the middle of the night to take it while you sleep, which can be much more distressing for everyone involved. If you currently have a title loan, the best thing to do is to get out of it quickly. Much like payday loans, car title loans are designed as a fast way to get cash for bills or emergencies. This chart provides an overview of how consumers are protected in relation to title loan companies in each state. For example, there may be a way to lower your interest rate or make other adjustments that lower your payments. It will be sold to recoup as much of the debt you owe as possible. -You may also be able to get a lower interest rate by refinancing if your car has lost value since you bought it. This means finding a new lender who will give you a new loan to pay off the old loan. It can stay on your credit report for seven years and it can lower your credit score. Ignoring the problem will only make it worse. A fixed-rate loan from a bank, credit union, or online lender is often less expensive than rolling your title loan over month after month. The MLA restricts terms for vehicle title loans, payday loans, and other kinds of high-risk financing products. If there is still a balance remaining after the sale and you don't pay it, it could be turned over to a collection agency. However, They do not accept partial payments, you have to make a single lump-sum payment once your repayment deadline . If at all possible, its best to avoid car title loans completely. With a focus on thoughtful and actionable money advice, Sean provides real-world guidance that can help consumers better their financial lives. How Can I Stop My Wages From Being Garnished? This may result in a collection account being added to your credit history. The lender must present you with the terms of the loan in writing before you sign it. TitleMax rates, fees and terms. The loans use your car, truck, motorcycle, or other vehicle as collateral. In many cases, bankruptcy offers limited relief from auto title loans. Surrendering your vehicle and repossession are very similar in financial terms. Be sure you completely understand the terms when you make the voluntary surrender. Although a financial institution determines the loan terms, the title loan process is similar to payday loans as you need to repay them within 30 days. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. How To Get Car Out Of Impound Without License. Chapter 13 bankruptcy is a restructuring of your debts, and this process includes secured debts such as car title loans, general car loans and even mortgages . His writing has appeared in The New York Times, USA Today and elsewhere. By signing up you are agreeing to receive emails according to our privacy policy. Bureau of the Fiscal Service. When you voluntarily surrender the vehicle, your credit report will indicate that fact in the status of the account. A repossession is reported on your credit reports for up to seven years. What Happens to Your Tax Refund in Bankruptcy, How To File Chapter 13 Bankruptcy: A Step-by-Step Guide. The use of any other trade name, copyright, or trademark is for identification and reference purposes only and does not imply any association with the copyright or trademark holder of their product or brand. Your APR will be based on the amount borrowed, the monthly interest rate, the fees you must pay, and the duration of the loan. If you dont pay, your lender can turn the remaining balance over to a collection agency. This means that if you stop making payments, the lender can take the car back. By voluntarily returning the vehicle, you are taking some responsibility for the debt you owe. {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/a\/ac\/Get-a-Title-Back-From-a-Title-Loan-Company-Step-1-Version-2.jpg\/v4-460px-Get-a-Title-Back-From-a-Title-Loan-Company-Step-1-Version-2.jpg","bigUrl":"\/images\/thumb\/a\/ac\/Get-a-Title-Back-From-a-Title-Loan-Company-Step-1-Version-2.jpg\/aid1410081-v4-728px-Get-a-Title-Back-From-a-Title-Loan-Company-Step-1-Version-2.jpg","smallWidth":460,"smallHeight":345,"bigWidth":728,"bigHeight":546,"licensing":"