Car Title Loans: Can You Default On Payments?Fast Action Finance SEO
Car title loans are basically a type of secured cash advance. If you need fast cash for an emergency expense, you can always approach a lender to get auto title loans in Mississauga and other cities across the Greater Toronto Area. This type of loan does not require you to have a perfect credit score as long as you can prove ownership of a car. The lender will place a lien on the car which secures it as collateral. In return for this, you are given a loan which you are required to pay back plus interest over a specified period of time.
The borrower is allowed to continue using his or her car as they service the loan. It is important to choose a payment plan that is feasible for you because negative consequences can occur if you default on many payments. Talk to the lender about how much you can reasonably pay biweekly or monthly so default does not occur. There are few cases of people who default on their car title loans and this may come with conssequences. Some of the consequences of defaulting on a car title loan include:
Defaulting on payments will extend the term of your loan as you will need to make up these missed payments. Having an extended loan term can lead to you paying more interest than originally expected as the interest accumulates over time. If payments are missed, it is in your best interest to repay them as soon as possible so the term of the loan is not drastically extended.
Repossession of asset
Although repossession can occur, many title loan lenders are quite lenient. This is because they are collateral lenders who have secured interest, so they tend to be less hard than unsecured lenders. Most lenders will give ample warning before repossession, so you can work out a deal to avoid this from occurring.
The best way to avoid a default is by properly planning your finances. You should prioritize debt payments as you would other expenses. Make sure that you include loan payments in your monthly budgets and ensure that you follow through. Try as much to cut back on your expenses to ensure that you save some money every month to go to your emergency savings. This way if you have a lot of debts lined up to pay and you suddenly lose a source of income, you can comfortably make your monthly payments as you get back on your feet. Only apply for title loans in cases of emergency and you should never use this cash on things that you can easily live without. Financial experts advise people to only apply for loans if they have already cleared their outstanding debts.
In addition to this, it is important to talk to your lender about your financial situation so they can work out a payment plan that works for the both of you. You may opt for monthly or biweekly payments and can choose a longer loan term, such as one year and a half, so the payments are smaller.
Talk to your lender
Lenders do not want to repossess assets and wish for the whole process to go as smoothly as possible. If a financial situation occurs and you are unable to make your payments then it is crucial to contact your lender and explain the situation. The lender can then restructure your loan so the payments work better for you and your financial needs.
One mistake that people sometimes make is defaulting on numerous payments and avoiding the lender’s phone calls and emails. If you can’t make a payment then call your lender and explain the situation, they will then be able to reschedule a payment for a time that works best for you.