Shrouded in Title Loan Debt? Here’s What You Can Do

Being buried under a mountain of debt is a scary feeling. Unfortunately, the overwhelming majority of people in the United States today are living paycheck to paycheck, In fact, almost 80% of Americans would have a difficult time paying a $500 emergency.

Think about that for a second.

Because of all of this financial strife, a lot of people are taking on subprime loan debt to get them out from underneath this dark cloud, not realizing that a lot of times they are mortgaging their financial future just for a little bit of short-term relief.

Take car title loans as a quick example.

A lot of people see these kinds of loan packages as a godsend, something that they can use as a bit of a financial life raft when they are drowning piles and piles of debt already.

How Title Loans Work

A car title loan is a subprime one that uses a vehicle’s title as collateral. These are usually advertised to borrowers with fair to poor credit. According to, title lenders will usually lend half the vehicle’s value, which is determined by the vehicle’s age, mileage, make, model, and a few other factors. Before a borrower can secure a title loan, they must bring their vehicles in for an inspection at which point the lender will take note of the aforementioned factors.

Once a loan contract has been written and signed, borrowers will typically have 30 days to repay it in full. If the borrower does not pay in full, the borrower will have to renew it for a fee. This is commonly known as a rollover. If the borrower fails to either pay the title loan off or rollover it, the lender has the right to repossess the vehicle.

In some cases, the borrower does have some protections afforded to them by their state’s small-loan statues. For example: If a borrower’s vehicle is repossessed, some states protect the borrower from having to continue paying the full amount. In a situation like this, the lender must deduct the proceeds from selling the borrower’s vehicle from the outstanding loan amount. Unfortunately, not all states have the proper laws in place to protect borrowers from predatory lenders.

The Allure of Title Loans

Nontraditional lenders offering car title loans are quick to advertise them as an opportunity to get quick cash with nothing more than your vehicle title as collateral – probably advertising that they don’t care about your credit score, your credit history, or any of your other financial details.

People flock to these kinds of services because of the promise of real relief, never realizing that they are simply playing a crooked shell game, and that their financial situation is going to get worse (sometimes much worse) sooner rather than later.

Over a few weeks, a financial snowball starts to build as detailed here in the Motley Fool. Loan fees add up, annual percentage rates on these kinds of loans regularly top 260%, and before you know it you are taking other loans out to take care of these financial obligations – and the cycle rinses and repeats until you find yourself in even more debt than when you started.

Thankfully though, you don’t have to relegate yourself to this kind of financial nightmare any longer.

No, there are a lot of ways you can manage and mitigate your situation to get out from underneath the vicious cycle of subprime loan debt just by taking advantage of the tips and tricks we highlight below.

Solutions for Car Title Loan Nightmares

The best solution for dealing with a car title loan nightmare is to simply find a way to pay it off as quickly as possible, making sacrifices in other areas to help you get out from underneath this debt ASAP.

Here’s five helpful tips to get out of debt on a low income:

Sadly, though, the overwhelming majority of people dealing with car title loan nightmares are in this situation precisely because they had no other options, no other alternatives, and no other financing or money available.

One option, and it is not for everyone, is to sell the car that has the title loan on it. This will give you a lump sum of cash to get out of it. You could also downgrade your car, so you are not totally without wheels.

Obviously, neither of these options are all that attractive. Refinancing or consolidating your debt with a more traditional lender may be a road you want to go down, too. Your financial situation may have turned around a little bit since you had to take out a car title loan and you may now have good enough credit to get a traditional personal or consolidation one from a bank, credit union, or credit card company.

Finally, it might just be a good idea to contact the car title loan people directly and see if there’s a way to negotiate friendlier repayment terms.


You might be a little surprised to hear this, but the overwhelming majority of car title loan lenders have absolutely zero interest whatsoever in getting into the car selling business. They don’t want to take possession of your vehicle, nor do they don’t want to repo your vehicle, and they don’t want to deal with the headache, hassle, and the expense of finding a way to sell your car after they’ve taken it because of it being a car title loan default.

Almost every company out there would rather talk to you directly to work out payment terms that make sense for both parties, and help you get out of this financial situation rather than strap you even more than you are right now – in which case they have to now spend a lot of money to sell your car (for who knows how much money), never recouping anywhere near what they would have gotten if they were flexible in working with you.