It's Possible to Get Out of a Car Title Loan. Here's How.

Car title loans provide consumers with an easy and fast source of cash, but they are dangerous and lead to many problems. The biggest issue is that they are difficult to pay off and end up costing drivers much more than they bargained for. Because vehicles are often used as collateral for a loan, they tend to have a decent amount of equity. That allows lenders to offer a short-term cash loan with a very high interest rate. If you don’t pay it back promptly, you face repossession. That’s why many people wonder how to get out of a title loan quickly.

We’ve got the answers you need! This article will help you brainstorm ways to escape a car title loan. Some of your options involve paying or moving the debt, while others don’t cost you anything upfront.

The Best Solution: Pay It Off

The best way to get out of a title loan is to pay off the debt. Of course, that isn’t always as easy as it sounds. Let’s face it; if you had the money, you wouldn’t have taken out the car loan in the first place.

If you come up with the cash to pay, simply contact your lender and ask for the payoff amount. They may not make it easy for you, but be persistent and you’ll get the facts you need.

Apply for a New Car Loan

If resolving the debt isn’t an option, you might want to consider getting a traditional car loan and using it to pay off your title loan. Unlike the car title loan, a traditional car loan is done through reputable sources like your neighborhood bank. They offer competitive rates and have term lengths all the way up to several years.

These are much easier to pay off than a title loan. The downside is that you’ll need good credit and you must have a late-model vehicle. Some car loans aren’t funded immediately.

If you’re on the fence, it doesn’t hurt to stop by your bank and ask them what they can do for you.

Apply for a Personal Loan

You also have the option to apply for a personal loan. Contrary to popular belief, you often won’t need a high credit rating for a personal loan if you have some form of collateral. Typically, a personal loan lasts for at least five years, so this gives you plenty of time to pay off your debts.

The magic of a personal loan is that it isn’t attached to any particular vehicle. That means you’re free to pay off your car title loan, and you can then sell the car at any time and use the money for something else.

Use Your Credit Card Cash Advance

Because most car title loans only cover a few thousand dollars, you might be able to take out a cash advance with your credit card to pay it off. Just keep in mind that your credit card probably carries a high interest rate on all cash advances. This method would only be a suitable option if you don’t have an excellent credit rating and couldn’t get another loan.

Let’s look at other ways you can gather the money to pay off a car title loan.

Borrow Money from a Friend

Do you have friends or family that can help? It might be embarrassing to ask, but most people that care about you will probably want to help once they understand the situation. They may not be in the financial position to come to your rescue, but it doesn’t hurt to ask.

If they agree to let you borrow money, be sure that you set up strict guidelines regarding the repayment and offer them interest as a courtesy. After all, your relationship is more important than any amount of money.

Get a Home Refinance Loan

If you own a home and have some equity, you might be able to apply for a home refinance loan. These have lower rates and can give you a good amount of money. This might not be an ideal solution for many, however, because it can take up to 30 days before you receive the cash.

On the other hand, if you have a lot of debt besides the car title loan that you want to pay off, this is a great way to do it all at once.

Cash Out Your Whole Life Insurance Policy

When you think about the cash assets you have, you’ll probably forget about your life insurance policy. If you have one for more than a few years it’s likely to have cash value.

Just make sure you understand what you’re getting into. For example, some policies allow you to repay the loan over time while others are going to force you to cancel the plan once you take money out.

Sell Your Car

If you don’t pay off the title loan, you are going to lose your car. Wouldn’t it be better to sell it and pay off the debt? Sure, you might have to get a new form of transportation, but it’s often better than destroying your credit score because of repossession.

Of course, selling your car with any type of lien on it proves to be slightly more difficult. Most liens show up on vehicle history reports and won’t be something you’ll want to hide from your potential buyer. That’s why we continue to say how important it is for all buyers to run a history report on any car they plan to purchase.

Default on the Loan

Of course, you could always stop paying on the title loan, but that’s not a good idea. Defaulting on a car title loan will damage your credit score and lead to repossession. You’ll be left with no vehicle and damaged credit.

You can also choose to voluntarily surrender the car to the lender to end the loan, and that might also lower your credit score. Not to mention, you lost your car.

File Bankruptcy

Filing bankruptcy can offer relief from auto loans and past-due debts. To be clear, bankruptcy is rarely a good option. It’s only worth considering if you have a large amount of debt – generally more than what you’d get from a car title loan by itself.

Once you file bankruptcy, your credit score and your ability to obtain new loans will be damaged significantly. Sometimes, bankruptcy doesn’t get you out of the loan and you could still face the repossession of your car.

Consult an attorney to determine whether your situation calls for bankruptcy.

Military Members

If you are in the military or a dependent, you might have some additional protection through the Military Lending Act. Speak with your financial expert to receive guidance.

Bottom Line – Avoid Title Loans

As you can see, most of the ways to get out of a car title loan without paying it off have serious consequences. Even if you play by the rules and make your payments on-time, some shady title loan businesses will hit you with hidden fees, penalties, or high interest rates.

We can’t stress enough how vital it is to stay away from car title loans in the first place, or if you already have one make this car title loan your last one. Then you won’t have to worry about any of this! There are much safer ways to get cash if you are in a bind, such as the methods found in this article.

You’ve worked hard to build up an emergency savings and earn yourself a good credit score. A car title loan risks everything you’ve worked so hard to achieve. If you find yourself in desperate need for money, sell your car for something more affordable or go through the proper channels to secure a loan through a bank instead.


Title Gods specializes in recovering lost car titles and solving all kinds of title-related issues. We are not attorneys. This article is not legal advice.

Cover Image Source