Your Checklist For Refinancing

Title loans are great tools for people that have bad or no credit, but need money fast (like that day fast) and own a vehicle. The way a title loan works is that the borrower temporarily transfers title ownership of their car to the lender, which acts as collateral for the money they are borrowing. When the loan is paid back in full, the borrower receives their title back.

The convenience and ease of borrowing that a title loan promises can make them look appealing, especially when you need money right away. But, that ease comes at a price. Depending on your lender, you could end up paying a lot more than you borrowed, as interest rates on title loans tend to be high. You could even lose your car if you struggle to make the payments!

If you’re locked into a lousy title loan, refinancing may be your best option to ensure that you receive a monthly payment that’s manageable and that you don’t lose your vehicle. You can learn more about title loans with this checklist of things to consider when looking to refinance:

Just Pay it Back

The most immediate option to get out of a title loan, and the first thing you should consider, is just paying the amount that you owe back. Obviously, this isn’t feasible for most people. If you have trouble with your monthly payments already, chances are you don’t have the full amount laying around.

However, you may be able to ask a friend or family member to lend a hand. You’ll have a much better time paying them back instead, and you won’t rack up as much interest or have to worry about your vehicle’s title being held in lender limbo.

Talk To Your Lender

If you’re in really dire straits financially, your lender may be willing to reduce your monthly interest payments and even reduce the total amount that you owe. That said, this isn’t out of the kindest of their heart. Remember, your lender is running a business. For them, this renegotiation may be worth it only because you’re insolvent and the time and resources that they’d have to spend to continue trying to get you to make payments may no longer be worth it.

Alternatively, renegotiating is good customer service for them and may increase the likelihood that you borrow from them again in the future. The drawback to this strategy is that, in most cases, renegotiation will hurt your credit, as you agree to pay less than you initially settled on, which makes you a future credit risk for other lenders. It may take some time to repair your credit for the future, but you’ll be more secure and comfortable in the present.

Get A New Loan

Instead of trying to negotiate with your current lender, you can replace your title loan with a new loan from a different lender. You may be able to find a loan with better rates that will, in the long run, cost you less than your current car title loan. If your credit isn’t great (which is a big reason people turn to title loans in the first place), you may have a problem getting a new loan, but try to target small, local banks and credit unions, as these establishments are more likely to lend to individuals with bad credit.

Find A Cosigner

You may not be able to find a friend willing to bail you out of your title loan, but you may have a friend or family member in your Rolodex that is willing to cosign for a new loan. This will not only improve your chances of getting approved but having a cosigner will help you get a lower interest rate. Thus, it will be much easier for you to manage and payback appropriately. If you default, however, it will damage your co signer’s credit reputation and put a significant strain on your relationship with that person. So, you want to make sure that you’re prepared to pay the new loan, no matter what.


The last thing that you want to do is default on your title loan, but it is an option for people that need to break free of these monthly payments. The bad news is that you can say goodbye to your car and your credit score. And, you will still owe money, even after defaulting.

You can soften the blow a little bit by voluntarily surrendering your vehicle, rather than making your lender have to come and take it from you, but it’s only going to help a little. Defaulting on a title loan is the thing you want to avoid most, but, for some borrowers, it is their only option.

Find a Solution That Works for You

A lot of people struggle with managing their money and can barely afford payments for title loans and other types of loans. Unfortunately, very few people start looking at refinancing options for their title loan until they’ve already dug themselves into a substantial hole. The sooner you start looking at ways to reduce your payments and get back to a comfortable monthly expense, the better your borrowing experience will be and the less likely you are to be at risk of defaulting on the loan.

John Morris
John Morrishttps://www.tenoblog.com
John Morris is a self-motivated person, a blogging enthusiast who loves to peek into the minds of innovative entrepreneurs. He's inspired by emerging tech & business trends and is dedicated to sharing his passion with readers.


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