By Lesa 
Do you have a title loan weighing you down?
If so, you’re not alone. Car title loans siphon off almost $700 million in fees each year from borrowers in 17 states. These high-cost loans are becoming a real problem for millions of Americans.
If you don’t have a title loan repayment plan, you may lose your car.
In this article, I’ll teach you how to effectively manage your title loan repayment plan and keep your car protected.
In this guide, I’ll cover:
- Why Title Loan Repayment Plan Is So Hard
- Budgeting Tips for Title Loan Repayment
- Negotiating with Lenders for a Title Loan Repayment Plan
- Emergency Options if You Can’t Pay Title Loan
- Long Term Solutions for Title Loan Problems
Why Title Loan Repayment Plan Is So Hard
Title loans were designed to be tough to pay back.
Why? These loans generally have the full principal plus interest due in 30 days. If the borrower can’t pay the full balance, the loan is rolled over for another month with additional fees tacked on.
Studies show that the average car-title loan is refinanced eight times. In other words, borrowers pay twice the loan amount in fees alone.
For example, if you take out a $1,000 loan for 1 month and can’t pay it back, you’ll pay fees to roll over the loan. Then your total balance due will keep increasing as you roll it over again and again.
Title Loan Fees Grow Your Debt
Why are these loans so expensive to borrow against?
Triple-digit interest rates (sometimes as high as 300% APR). Short repayment terms (typically 30 days). Fees to roll the loan over if you can’t pay in full. And, if you default, repossession of your car which is the loan collateral.
The combination of these factors creates a debt trap. This is why it is critical to have a title loan repayment plan.
Budgeting Tips for Title Loan Repayment
If you want to get ahead of your title loan repayment plan, follow these budgeting tips.
The most important thing? Treat your title loan payment like the highest priority bill. The consequences of your car getting repossessed are more severe than any other bill not getting paid.
Your car is how you get to work. It lets you support your family. It helps you manage other responsibilities. That’s why the loan you borrowed against your vehicle should be first in your budget.
To start budgeting, make a list of your expenses each month. Put your title loan payment due date at the top, even ahead of your rent and utility due dates. It sounds crazy, but put your title loan payment first.
- Other bills not getting paid may damage your credit score.
- But if you default on your title loan, they could repossess your car.
Create a Title Loan Emergency Fund
When you’re stuck with a title loan, every little bit helps.
Spare change in your budget? Set aside any extra money that you have each week. Even $20 or $30 here and there can make a difference when the payment is due.
Look for this extra money in places like unused subscriptions, eating out, yard sale-ing items you no longer need, or picking up a side gig like Uber driving. Build this small title loan emergency fund so you don’t miss a payment.
Track Your Spending Habits
Grab a simple budget tracker spreadsheet or notebook. Record every expense you make, no matter how small.
Tracking your expenses lets you see where all of your money is going. You’ll likely be shocked at how much of your budget can be diverted to your title loan payment.
Many borrowers find they’re spending over $100/month in small expenses they don’t even remember making. Imagine how much of an impact you could have on your title loan if you redirected this cash!
Negotiating with Lenders for a Title Loan Repayment Plan
Fun fact: Most lenders would rather work with you than take your car.
Repossession is a last resort for title lenders. They have to pay towing and storage costs and auction fees to get your car back.
When you borrow from a car title pawn in Florida or similar lender, knowing the title loan process can help you negotiate better repayment terms. Most lenders would rather receive smaller monthly payments than deal with all the expenses and hassle of repossessing your car.
Communicate Early & Often
Reach out to your lender as soon as you know you might be unable to pay.
Call them before the payment is due. Explain your situation and any challenges you’re facing. Ask about options like extensions, partial payment plans, or refinancing.
The key here is to reach out before you default. Lenders are much more receptive to working with borrowers who proactively contact them and seek a solution.
Document Your Discussions
Write down notes for every interaction you have with your lender. Note the date and time of every phone call, meeting, and email. Jot down details of what is said.
Get any modified terms you both agree to in writing from the lender.
Emergency Options if You Can’t Pay Title Loan
Even the best-laid plans sometimes fall through, and you can’t make a title loan payment.
Don’t panic. You do still have options. But you have to act fast.
Look for Alternative Funding Sources
Before your payment is due, try to borrow from family and friends (the cheapest option), sell valuables you own, use a credit card cash advance (expensive but usually cheaper than rollover fees), or apply for help programs.
Credit card cash advances still have sky-high interest rates, but they are less than title loan rollover fees.
Know Your Rights as a Borrower
Title loan rules vary from state to state, but here are some basic borrower rights:
- Lenders must provide a written notice before repossession.
- They must wait a certain number of days after default (usually 10 to 30).
- They must return any excess value above the loan amount after selling your vehicle.
These rights don’t stop your car from being repossessed, but they may give you more time.
Consider Refinancing with Another Lender
If you can’t pay your existing lender, refinancing your title loan with another lender might be an option.
Some lenders specialize in paying off your existing title loan and giving you a new one with different terms. While this won’t solve your debt problem, it might give you more manageable payment options or more time to repay.
Long Term Solutions for Title Loan Problems
Escaping title loan debt takes a long-term solution.
Here’s the hard truth: The only way to fix a title loan problem is to pay it off completely and not take out another one.
Build Up an Emergency Fund
Start saving money right away after paying off your title loan.
Even a $500 emergency fund can be enough to avoid taking out another high-cost loan when an emergency pops up.
Improve Your Credit Score
Work on building your credit score so you have cheaper loan options in the future. This means:
- Paying all bills on time every month.
- Paying down credit card balances.
- Checking your credit report for errors and disputing them.
Create Multiple Income Streams
Create more ways to earn money so you can better handle financial emergencies without having to borrow.
Whether it’s part-time work, selling products on your skills (freelance writing, graphic design, etc. ), or starting a small business. Extra income can really help.
Taking Control of Your Financial Destiny
Title loan repayment doesn’t have to mean losing your car or sinking further into debt.
Remember these key strategies:
- Put your title loan payment at the top of your budget
- Contact your lender before you default and explore all options
- In emergencies, find all possible funding options
- Save a small emergency fund to cover future unexpected expenses
And most importantly? Don’t wait. Take action as soon as you know you have a title loan repayment problem. The longer you delay, the fewer options you will have.