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What happens if you default on a car title loan?
I took out a car title loan on my vehicle a few weeks ago to help cover rent, but I don’t think I will be able to make my payment this month. What happens if you default on a title loan?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Car title loans use your car as collateral, so if you default on a car title loan, the lender can repossess your vehicle. However, most lenders do not immediately start the repossession process if you miss a payment. Instead, they give you the option to extend the term or pay back the loan with additional penalties and fees.
Depending on your state, laws may require title loan lenders to give you advance notice before repossession. But if you know you’re going to default, contact the lender immediately. More often than not, the lender will allow you to extend the loan repayment period without any hassle other than a bit more money.
With costly monthly fees and a high
APR
, car title loans can be challenging to repay, cause immense stress about losing your vehicle, and can easily lead you into a cycle of debt. Only use them as a last resort. If you are looking for ways to make your monthly payments more manageable, consider saving money on your
car insurance
using Jerry
. Jerry
is an insurance comparison app that shops for low prices with over 50 different insurance companies for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away. They can even help cancel your old policy! View full answer
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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