The Best Options Available When You're Struggling To Pay A Loan

Posted on: 22 July 2019

The best way to use an auto title loan is to obtain the loan when you are short on cash and then wait until you have cash before paying the loan off. Paying off the debt will settle the matter and will also be great for your credit score. However, if you simply don't have the money, there are other ways to exit an auto title loan.

Consider Another Loan

You may be able to replace the title loan with a different loan. Whether or not this is a good idea is based on if the title loan is less expensive than another type of loan you may be able to acquire. For example, a loan that is not secured by the collateral of your title loan might end up being more expensive. There are some credit cards that may have promotions that will make it less expensive to charge your debt to your credit card, but only until the promotion ends. 

Sell Your Car

If your car is somewhat expensive, you may be better off selling it for a cheaper car and using the money to pay off the title loan. While it can be more difficult to sell a car without the title, it isn't impossible. 

Talk to the Lender

When it becomes more difficult to pay off your title loan, the best thing to do is to contact your lender. Most lenders are willing to work with you. For example, if you need more time before you are able to make the payment, and the lender will eventually receive the money, you may be able to have your payment delayed. You may also be able to have the expected monthly payment lowered for a period of time.

Pay Less Than What You Owe

If you won't be able to pay off the entire loan, you should still communicate with your lender. Oftentimes, the lender will be willing to accept less than what you owe. However, this can have a negative impact on your credit score because you will have settled the debt for less. Because of this, it is better to find any way possible to pay off the debt so that your credit score will improve. Whenever you pay a debt, this will demonstrate that you are using debt responsibly, and the title loan will help you receive loans in the future through the power of your credit.