Do you have a title loan you are trying to get out of? Thankfully, there are plenty of companies that pay off title loans. Learn more about title loans and how you can potentially get out of them with a title loan buyout!
What Are Auto Title Loans?
A title loan is a secured loan that usually comes with a very high-interest rate and a short-sighted payment schedule. Title loans may go by a few different names in the industry, but know that they all refer to the same type of funding. Some different names for a title loan are:
- Car title loan
- Auto title loans
- Vehicle title loan
- Car equity loan
Car title loan lenders also require that the borrower’s vehicle have enough equity so they can use it as collateral. It is the value of the borrower’s car that secures the funding provided by a title loan lender.
Upon approval, car title loan lenders will sign onto the borrower’s vehicle title as a lienholder. When a lienholder is listed on a vehicle title, the party listed has partial ownership over the car. Since the lender is a lienholder, they have the right to repossess a borrower’s vehicle if that borrower defaults or fails to pay back their title loan.
Keep in mind that an auto title loan, an auto loan, and a title pawn loan, are not the same. An auto loan is funding provided by a bank or a car dealer specifically meant to pay for the borrower’s vehicle. In fact, most title loan companies will not accept applicants who have an auto loan because it means they are still paying off their vehicle. A title pawn loan is when a borrower physically gives up their car in exchange for funding. When you pawn your vehicle, you won’t get your vehicle back until you pay back what you borrowed. You also run the risk of someone else purchasing your car before you are able to repurchase it.
Pros and Cons of Title Loans
Since title loans are secured funding, they are readily available to people who may suffer from poor or no credit. If you own a vehicle and have less than perfect credit, a car title loan may seem like an excellent solution for your immediate cash needs. But unfortunately, title loans have several significant disadvantages every borrower should know about.
To start, title loans may come with hidden fees like balloon payments, prepayment penalties, and other inconvenient finances charges. Furthermore, the high-interest rates and short payback terms on title loans may cause your monthly payment to become unaffordable.
What Is a Title Loan Buyout?
Like a car title loan refinance, a title loan buyout is when a lender takes your existing title loan and rolls it over into a new loan deal. When borrowers get a title loan to cover large expenses and need more than just a few weeks to repay the loan, they often find their balance, and monthly payments can get out of control quickly. Unaffordable loans can cause a borrower to have late or missed payments or, even worse, default on their loan altogether. Instead of defaulting on your title loan and dealing with debt collectors, a dip in your credit score, and other financial inconveniences, try a car title loan refinance!
How To Get a Title Loan Buy Out
Applying for a title loan buyout is quite similar to applying for a regular loan; here is how the title loan refinancing process works.
First, if you are working with an online lender, go to their website and fill out a loan application. Make sure you request a loan amount to cover the remaining balance of your current title loan. From there, your new lender will contact you to tell you the status of your loan approval. After you send in your documentation and sign your contract, you will receive your money. Then, use your funds to pay off your title loan and be done with it forever!
What Companies Pay off Car Title Loans?
There are a few different loan companies that are usually willing to buyout title loans. Depending on factors like your credit score, general income, and financial habits, you may have an easier time finding loan approval with a particular type of lender over others. Below are some lenders you may consider when looking for a title loan buyout.
A traditional bank is one place you may be able to find title loan buyouts. Since banks are an extremely conventional type of lender, they usually only accept applicants with good credit and a clean credit history. If you have a bad credit score or have dealt with bankruptcy in the past, you may have trouble finding loan approval with a bank. Only those who feel confident about their credit score should think about applying for a loan through a bank.
A credit union may be able to buyout your existing loan if you meet their eligibility criteria. Credit unions are financial institutions owned by a group of borrowers and therefore offer special perks and benefits designed to help debtors. Many credit unions also function on a local scale and only accept borrowers who live within a specific area. Also, since credit unions are often small, low-scale financial institutions, they may not offer online or mobile banking options.
A private lender, also known as a direct lender, may also be able to help pay off your existing title loans. A direct lender may offer loan products such as installment loans, personal loans, payday loans, or other bad credit loans. There are also many different types of private lenders. For example, bad credit direct lenders offer funding to people with both high and low credit scores, while banks usually only provide financing to those with a higher score.
Benefits of an Auto Title Loan Buyout
A title loan buyout can be a great way to organize your finances and get out of spiraling debt. Check out the potential benefits you can enjoy with a car title loan refinance.
Better Interest Rates
You may be able to get a lower interest rate with a title loan buyout. Depending on financial factors like your credit history and income, lenders may be able to grant you a more favorable annual percentage rate. Getting better rates will help you save money overall as you pay off your new loan balance.
Affordable Payment Plan
Title loans often come with extremely brief loan terms. If the payment plan your current lender set you up with just isn’t working for you anymore, a title loan buyout may be able to help you extend your terms. Spaced-out installments will result in lower monthly payments, making paying off your new loan a breeze!
When you refinance your current loan, you may be able to get extra money! When you apply for your title loan buyout, you can request funds to cover your existing loan as well as additional funding, if needed. Keep in mind that how much cash you are able to get with a loan ultimately depends on factors like credit, income, and payment history.
Dealing with a difficult financial situation can be even more stressful when working with a subpar lender. Getting a car title loan refinance allows you to work with a new lender who will thoroughly communicate with you and meet your financial needs.
Potential Increase in Credit Score
A title loan buyout may also be able to help you boost your credit score. As you make timely installments and eventually pay off your loan, credit bureaus will receive this positive data and include it on your credit report. When you do your next credit check after paying off your refinanced loan, you may see an increase in your score!
Alternatives When You Don’t Want To Work With a Title Loan Company
If you are thinking about getting a title loan, online payday advance, or another quick online loan option, wait! There are smart ways to go about getting same-day cash that doesn’t involve working with unreliable title loan companies or other sketchy lenders. Avoiding title loans with these other options may be the key to keeping your finances steady and organized. Check out these options that may be a better long-term solution for your finances.
- Try another type of loan, like installment loans with a trustworthy lender.
- Sell unwanted possessions such as clothes you don’t wear or appliances you no longer use
- Get a temporary part-time job and earn your extra cash instead of taking out a loan.
- Try a money-saving challenge and utilize your current income so you don’t have to apply for funding in the first place.
- Make lifestyle changes to save on monthly bills and payments. For example, you can turn off lights when you leave a room or unplug appliances when you aren’t using them.