Let’s say that you have suddenly found yourself in the trenches and struggling to keep up with your auto title loan payments. If you have this type of struggle, you can think of two immediate options. For those who have improved their credit, you could refinance your loan into a new loan for a better interest rate. However, if you don’t have good credit, this could prove a negative because the ultimate goal behind it is to get a lower interest rate. The second option that you have is to give up your car. When you use your car for work, however, that can cripple your finances, even more, to not have a car.
What Do You Do?
Instead, you might look for a title lender who will buy your current loan to replace it with a lower interest rate and a higher amount of what you pay. While this may not sound ideal at first, it works similar to refinancing, and it helps you to keep from having your car repossessed. Even when you have bad credit, you can still get a loan that could save you from having to worry about your car getting repossessed.
Title Loan Buyouts: What are They?
A title loan buyout works as an agreement between two lenders who were offering a loan. If you want to take advantage of a title loan buyout, you will first have to search for a company that specializes in it. As we said above, title loan buyouts work a lot like refinancing because you replace your old loan with the new one. You have different pawnshop companies and lenders that are willing to take on this new loan. However, most of the time, they will only give you 30 days, which is not long to pay it off.
When Should You Do a Buyout?
You should do an auto title loan buyout if, like with loan refinancing, you can get a lower interest rate on it. Many times, buyers can get a lower interest rate that they will find more favorable. At the same time, they won’t have to pay as much in interest on it. You may also want to consider this if they plan to repossess your car because it gives you one last lifeline to prevent that from happening. In addition, paying off your loan over an extended length of time could give you the necessary breathing room so that you don’t have to worry about missing payments, which could eventually lead to a repossession of the vehicle.
Banks That Buy Out Title Loans
The banks will buy out your title loan and help you save money.
When an Auto Title Loan Buyout Makes No Sense
An auto title loan buyout makes little sense if you simply can’t repay what you owe on the loan. If your lender will still come and seize the car, it makes little sense to go with this option because you will still wind up losing the car in the end. Another risk comes from extending your loan. Any time that you do this, you should understand the terms clearly because you risk paying more in the long run than what it will be worth. Finally, be aware of lenders that will charge you exorbitant fees for this because the goal is to get out of debt, rather than going deeper into debt, and sometimes it’s a shady practice that these lenders follow.
Refinancing: What’s the Difference between That and Auto Title Loan Buyouts?
You will find some short-term lenders who might advertise auto title loans buyouts as different from refinancing, but in truth, they both have many similarities. With both of them, you will negotiate more favorable terms with the lender, and the goal behind this is to help you with keeping your car through lowering the payments on them. Whether you choose to refinance or an auto title loan buyout, both of them try to help you with managing your payments.
When we look at the difference between the two, you have a couple of key differences. Auto title loan buyouts were intended more for the crowd that has gotten a couple of months behind on their payments, and they’re looking for a way that they could get caught up on the loan. The second person, the one who takes the refinancing route, will normally do it differently. This is because they will usually have an improved credit score since they first got their loan. What they want is to lower their interest rates because they could get a better deal by refinancing their loan.
How Does a Person Get an Auto Title Loan Buyout
To begin the process of a title loan buyout, you will first have to sign the loan contract for the existing loan. This is after the fact that you have found a lender who will be willing to do an auto title loan buyout. When you this, however, always keep a close eye on the terms within the contract to make sure that you get the most favorable loan. After you have signed the contract, your new lender will put down money on the previous loan owed. This is where it is much like refinancing because it is getting you a new loan at a lower interest rate. After the lender has paid the loan, they become the new lienholder on your car title, and this means that if you miss payments, they will be the one to repossess the car.
You have to pay close attention to the terms within the contract because this is how you will be subjected to paying off the loan. If the terms within the contract don’t seem favorable, you will still have to pay them if you signed on the dotted line. For this reason, you should check and double check the terms found within the contract.
Beware: Short-term Loans May Not Be in Your Best Interest
Before you ever go and take out a payday loan or an auto title loan, you first have to understand how some of these loans exist with the intentions of trapping you into an overburdening cycle of debt. You may find that you have to enter a second or even a third loan as a way of paying off your debts and getting a lower interest rate. In some cases, if you can get by without having to take out an auto title loan buyout, you may be better off in doing so.
To combat this problem, you have a couple of different alternatives that you may want to consider like:
- Get an extension on your payments
- Take on side jobs
- Go through a government agency
Getting a lender to extend your payments can help you to catch up. The biggest problem with getting behind is that once you’re behind, you have to pay even more just to catch up. Side jobs are your other options where this can help you to pad your bank account so that you could afford the loans. For example, you might take up selling on eBay or doing graphic design on the internet as a freelancer. Finally, you could visit a government agency and see how they could help you through the process. Sometimes you will find a government agency or a local charity that may be willing to help you out of your situation. While they may not necessarily give you money, they could help with your rent payments, help with food or help with paying the utilities on the home. This frees up some of your cash.
When you go to get an auto title loan buyout, it’s important that you look around to see what is available to you. This can help you to find more favorable terms and ensures that you don’t get taken advantage of. Speak with multiple lenders and see what options they have available to you.
Auto title loan buyouts can be advantageous under the right circumstances. They can help you to keep from having your car repossessed or losing your boat or motorcycle, but in some cases, you may be better off letting it go if you believe that you still won’t be able to catch up on payments. When you go shopping for an auto title loan buyout, look for terms that will match your budget the best.