What Happens When You Default On Your Car Title Loan?Fast Action Finance SEO
When most people get loans, they usually don’t do so anticipating that they will default on the loan. Most of them usually do as much as they can to ensure that they end up paying off the loan as agreed by the terms of the loan. However, if you are thinking of doing the same, it would be wise to also figure out what would happen if you ended up defaulting.
Even if you might be keen to avoid this from the outset, having an idea of what can happen will give you a better chance of knowing how to handle instances where you are unable to service the loan. Most of the time, most loan agreements have provisions for this, but the fact that people don’t pay attention to them means that they don’t end up benefitting from them.
The number of things that can happen when you default from paying car title loans in Mississauga varies depending on the company you are working with, as well as the product you are using. This means that if you want the best idea of this, you would need to thoroughly go through the documents. However, there are certain basic things you can expect from most lenders if you end up defaulting. Some of these include:
The lender will try to contact you
In many cases, the first thing that will happen if you default on the loan is that the lender will try to contact you. The goal of such contact is to try and make the account current again, which means to try and ensure that you start servicing the loan. How hard the company works to do this depends on the type of firm you get the loan from. For instance, there are some that will only try to call you a few times. Others will do a lot more, including sending someone over to your home or office to try and talk to you.
As has been said, the goal of such contact is to try and encourage you to start making the payments again. However, you can also use this opportunity to renegotiate the terms if possible. If you are having financial difficulties, for instance, you could explain this to the lenders. Some of them will agree to slightly change the terms of the loan such as by giving you a grace period, so that you can have some breathing room. This may come at different costs, such as slightly higher interest rates for the rest of the loan.
The fact that the company will try to contact you when you default means that you should always provide correct contact information when you are applying for the loan. This way, it will not be difficult for them to do so.
Repossession of the car
The other obvious thing that can happen is that the car might be repossessed if you don’t pay off the loan as agreed. When you sign up for these loan types, you usually sign a lien which gives the lender a stake in the car. This way, they will have the right to repossess it and subsequently sell it in order to recover the loan.
Most high quality lenders usually want to do as little harm as possible to their clients. Once they repossess the car, you can still get it back if you start making the payments or come to an agreement with them regarding future payments. It usually benefits both the lender and the borrower when the loan is paid as agreed rather than through repossession. This is also the main reason why you should always get car title loans from firms that have a good reputation. The risk of losing your car when you default in such cases is usually minimal. If you are unable to service the loan even after the car is repossessed, then it may end up being sold in order to recover the loan.
Your credit rating will be affected
Depending on which firm you get the loan from, you may also get a degradation of your credit rating if you fail to pay the car title loan. To find out if this will happen, you will need to go through the terms of service you sign when applying for the loan. Alternatively, you may also consult the company’s agents for this information as well.
These are the things that are likely to happen if you default on paying your car title loans. The good thing is that when you combine proper planning with getting the loan from a source you can trust, the chances of defaulting will go down significantly. Working with a high quality firm also assures you that even if you default, they are still going to handle you in a humane manner, and the risk of you losing your car will be less compared to other firms out there.