The term title loan means a secured loan. The borrower decides they’ll use their vehicle as collateral when they need some money.
The term “secured loan” means a loan where the borrower puts up something as collateral, like their house or car. They might do that if they don’t have the best credit and need money from a credit union or bank.
You should also know about title loan buyouts. This is a common practice, and we will discuss it in the following article. Before you start Googling “places that buy out title loans near me,” you should know everything that goes along with this option.
What is a Title Loan Buyout?
A title loan buyout happens when a person with one of these loans transfers their car title loan to a different creditor. They might do this if they feel the interest rate they’re paying on their current title loan has become too onerous. Maybe they thought they were getting a good rate at the time they set it up, but now they want better terms.
How Do You Get One of These Buyouts?
If you want one of these buyouts, you must find a company willing to do that for you. You should not have very much trouble. Many times, you’ll have companies competing that all want your business. You can look at the different ones and see which option gives you the lowest interest rate going forward.
You should do a title loan buyout when you can find a willing company that also gives a better interest rate or more time to pay back what you owe. If the companies you see don’t offer these benefits, this option makes little sense.
Does a Title Loan Buyout Mean Refinancing?
You may hear the term loan refinancing and realize this practice sounds the same. The two are virtually identical.
With loan refinancing, you have a company that pays off your existing loan and gives you a better interest rate, extends the payment time, or both. That’s what happens with title loan refinancing as well. There’s only one difference, your car’s involvement as collateral.
How Long Does the Process Take?
If you contact a company that does title loan buyouts, you can reach out and describe your situation, and they can spring into action if they’re interested. They will look over your current title loan details and give you an offer.
If you take that offer, you can start the process that same day. Often, you will have your new title loan set up and functional within one or two business days.
Why Would You Do This?
If you’re having trouble paying back the loan, and you feel the lending entity could repossess your car because they have a lien on it, that’s when you might look into this option. Many times, this action can save your vehicle before the original lending entity gets it.
The original lending entity gets their money, so they’re satisfied. You delay losing your vehicle, so you’re happy too.
Remember, though, you must still pay off the new loan. You still have this financial responsibility hanging over you, and you must get out from under it somehow.
You might do that by getting a better-paying job or borrowing money from a friend or family member. The sooner you can pay off the new loan, the better. Maybe it comes with a better interest rate, but the new lender still wants their money.
They didn’t bail you out for friendship’s sake. Title loan buyout companies are still for-profit entities.
What Else Should You Consider with This Option?
If you think this move makes sense, look at some different places that will do it for you and see what terms each one offers. You should always compare and contrast the offer that each one has on the table.
Maybe you see that one company gives you more time for the loan payback, but they don’t have very good reviews online. Perhaps you see that they have one and two-star ratings out of a possible five. If you see several nightmare reviews, you should probably choose another option.
You also want a company with very good customer service. Look on their website and see how you can contact them. If you notice they have a sparkling reputation and the best rates, you can move forward. Doing a title loan buyout can help you out tremendously in some instances.