A large group of customers is currently unable to take out a bank loan, because it requires high creditworthiness, a stable situation and regular income to obtain it. Many debtors listed in the debtor databases do not meet these criteria, so title loans are a good alternative for them. They allow you to borrow more money, and the lender is secured by your car.
What is a secured loan?
A secured loan is understood as a situation in which the customer transfers the ownership rights to a given object or security to a loan company and accepts the risk that failure to repay the loan may result in loss of access to the pledged property.
The most frequently chosen object of lien is a car because it is quite an expensive asset whose value is easy to calculate. Most customers apply for a title loan on site due to fast approval and minimum formalities. Customers who decide to use such a service also pledge valuable items such as electronic equipment, jewelry, expensive clothing and even home furnishings. There is really no limit to what you can mortgage on such a loan. The final decision, however, rests with the company and its valuation, which does not always have to be beneficial for the client.
Repayment of the secured loan
In the case of a standard loan, the lack of timely repayment may have negative consequences that will be felt for a long time. One of the possible effects is, for example, another entry in the debtors’ databases, which significantly reduces our chances of getting a loan or buying products in installments. We should also expect an increase in the overall costs of a given service, resulting from the financial losses suffered by the company as a result of our irresponsibility. In some cases, the case may be handled by a debt collection agency, which can cause discomfort and stress.
In critical situations, legal proceedings may be initiated, and then the client will have to deal with a bailiff. Public officials have many more powers and methods for quick debt recovery, so the client should expect a bailiff to enter the apartment to seize and cash in on his property.
The case is slightly different when we decide to take out a car loan. The pledged car, in the event of default, will become the property of a loan company, pawnshop or other entity, but the customer will not be affected by other consequences. For many people, losing access to a car is a better solution than having to submit to bailiff enforcement.
Is it possible to get out of debt without losing a car?
Every indebted person wants to get rid of arrears and get out of financial problems. However, how to do it if there is nothing to pay off liabilities? Are you asking yourself how to get out of title loan without losing a car? It is quite difficult, but not impossible.
Getting rid of debt in such a situation requires hard work, and exactly 3 steps:
- through analysis of your financial situation,
- preparation of an action plan – in terms of obtaining funds to repay debts, as well as the manner of their settlement,
- consistent implementation of the debt recovery plan – it requires a lot of discipline and many sacrifices, and thus even changing your current life.
HOW CAN YOU GET OUT OF A TITLE LOAN? – CHECKLIST
If you want to get out of debt effectively, get started today. Don’t wait for the situation to worsen. It will take time to get out of debt, but if you are consistent, you will achieve your goal. Here’s where you need to start to get out of debt.
STOP GETTING EXTENDED FURTHER
The main thing! The first step to getting rid of debts is to stop taking out more credits and loans. Stop getting into debt, otherwise you will fall into a vicious cycle where you will run out of money every month to pay off your loans and your total debt will keep increasing.
START CONTROLLING YOUR DEBT
Instead of taking more loans to fill a hole in your home budget, focus on controlling the debts you already have. How to do it? Make a list of all permanent obligations (in a notebook or computer) and keep an eye on their repayment dates. You can additionally set reminders on the phone, thanks to which you will not be late with the payment of title loan or bills.
ANALYZE YOUR HOME BUDGET
Analyzing your home budget is the next step in getting out of debt. So, calculate exactly what your monthly income is and how much will you have left after paying off all permanent and current liability for title loan, rent, utility bills, etc.
The remaining amount must be enough for your daily maintenance, as well as to pay off the title loan. What to do if it is too small?
Get rid of extra and unnecessary expenses
If you are short of funds to pay off your obligations, look for savings, so generate an additional amount from your current income by reducing some expenses.
You can opt out of many of them, e.g. :
- subscription for the streaming platform,
- a large internet package,
- driving a car to work (change to a bicycle or start using public transport),
- eat out (instead of buying lunch at work, prepare it at home),
- favorite and expensive entertainment – e.g. regular visits to the theater, fitness club or pubs,
- holiday trips to the seaside, to the mountains or abroad – you can spend a vacation with your family cheaper, for example, by a nearby water reservoir or with friends in the countryside.
These small sacrifices can generate up to several hundred dollars of additional funds per month, so they will help you pay off your debt.
INCREASE YOUR INCOME
You won’t get out of debt without money. They should be taken from somewhere, there is no other way out. In addition to reducing expenses, it is also worth increasing your income. You also have many options in this regard:
- look for a better paid job,
- try to apply for a promotion in your current job,
- ask your boss for a raise,
- take overtime as often as possible, and if possible, also work on weekends when salary rates are higher,
- think about additional work – e.g. tutoring or providing various services on days off, e.g. gardening, cleaning or transport,
- consider going abroad for work – a seasonal job is enough, which will allow you to earn more money quickly.
STOP ANOTHER LOAN
If you want to get out of a title loan without showing up with car, first of all, stop incurring further obligations. Title loans usually have a repayment period of 30 days and it is difficult to return them in such a short time. A popular way to deal with this problem is to take another loan to pay off the previous one.
Don’t do this – it’s a straight path to a debt spiral! The next loan will give you peace of mind only for a moment, and in fact will increase the debt (by further interest and commissions), which will also have to be repaid in a fairly short time. Taking more loans to pay off the previous ones will make your debt grow like a snowball from month to month.
CONTROL YOUR LOANS
The next step on the way to getting out of loan debts is to control the repayment of liabilities. Keep an eye on the repayment dates of individual loans and try to regulate them one by one on the day designated by the lender. If you do not manage to return some of them within the specified time limit, take steps before its expiry to avoid the lost of your vehicle.
CONTACT THE LOAN COMPANY
If you do not have funds to pay off a title loan, contact the lender before the deadline for its return. Tell him about your difficult situation and ask for help in solving the problem.
Loan companies most often offer the so-called loan refinancing. It is nothing else than granting another loan to repay the currently due one. We do not recommend this solution, because refinancing gives you additional time to pay off the obligation, but on the other hand, it increases the debt (the refinancing loan is quite expensive), which does not help you get out of debt. Still, if you are interested in refining your title loan, learn more with Business Yield.
Payment in installments
It is better to ask for the debt to be divided into installments when talking to a loan company. Contrary to appearances, many institutions agree to it and divide the outstanding amount, e.g. into several weekly or monthly installments. If you pay them back on time, you will avoid debt collection and eventually get out of debt.
GOT OUT OF A TITLE LOAN? TAKE A LESSON FROM IT!
Getting out of a title loan often takes many months and comes at a cost. That is why, once you get out of debt, do your best not to fall into debt again.
You will achieve this goal keeping in mind a few rules:
- keep an eye on the payment deadlines of bills and other obligations,
- learn to manage a budget – plan your expenses so that they never absorb all your income,
- systematically save money to create a financial security cushion – thanks to it you will no longer have to take out loans for current expenses, but cover them with savings
- look for savings every day – the more money you save, the better prepared you will be for the most difficult situations related to, for example, losing your job,
- use credit products carefully – take title loans only for important needs, not for temporary whims, and before taking them out, compare offers to choose the cheapest solution.