What happens when a car title loan matures, but there’s still a payment balance? While the best practice is to make all payments according to schedule, this is not always possible.
When a borrower cannot clear all balances before the car loan maturity date, they run the risk of losing the vehicle to repossession by the car title loan lender or collection proceedings—both of which should be avoided. Read on for more on car loan maturity date, the importance of making timely payments, and everything in between.
What is a Car Title Loan Maturity Date?
In simple terms, a car loan maturity date is the date when a borrower is expected to pay the loan installments in full to the car title loan lender. If, for some reason, someone is not able to make the total payments before the maturity date, it’s essential to pay it off immediately to avoid the consequence of non-compliance.
But what about when the balance is significant, and the borrower does not have the financial means to clear it? The best cause of action is to inform the lender immediately to explore alternative payment terms—including paying in installments.
Consequences of Unpaid Car Title Loans
If a borrower misses a loan maturity date and has not made arrangements for paying the balance, several possible action causes are possible.
Additional Fees to the Loan: The car title lender pushes the due date to the following month and adds a fee to the remaining balance. In such a case, interest continues to accumulate until the outstanding amount is cleared. The total compensation now includes the skipped payments and interest.
Repossession by Car Title Loan Lender: If worse comes to worst, the lender may use the car title as collateral and repossess the vehicle. But keep in mind that this is often the last resort measure—owing to its time-consuming and costly nature. Once repossessed, the lender has the right to sell the car to recover unpaid funds.
The procedures and regulations governing the collection of car title loans differ from one state to another. With this in mind, it’s crucial to learn and understand the rules before seeking out this type of loan.
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