How to Get Rid of a Car With a Title Loan
A car title loan is a short-term, high-interest loan, generally due in 30 days, that is secured by the title of a vehicle. These loans are similar to payday loans, and many title loan borrowers fall into a cycle of repeat borrowing and risk having their vehicle repossessed if they fail to follow the loan terms. Before this happens, borrowers should consider selling their vehicle to avoid falling deeper into debt. Selling a car with a title loan attached is challenging, but it can rid the owner of any outstanding car loans as well as the vehicle.
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Instructions
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Gather all loan statements attached to your vehicle. Determine how much money you still owe on the vehicle and what the payoff amount is. Call your lender for verification of this amount. Ask family and friends if you can borrow the amount of the title loan to pay it off, and do so if possible.
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Check the Kelley Blue Book value of your vehicle online (see Resource). You will need to enter your car's make, model and year and answer some questions about its condition to get an estimated value. Compare this amount to the payoff amount determined in the first step.
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Consider trading your car in at a dealership for a new vehicle. Inform the dealership of the title loan attached to your trade-in. Ask if the title loan amount can be rolled into new financing or if the dealership offers any cash-back rebates or incentives for buying a new car that you can use to pay off the title loan. Depending on how eager the dealership is to sell cars, a car salesman can work with you and the title lender to obtain the title to your trade-in. Do not trade in your car until you have an agreement in writing from the dealership that the title loan will be paid off. Follow up and make certain the title lender has supplied the dealership with the car title.
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Advertise your car for sale if you do not trade it in at a dealership. Post information using online listings and your local newspaper classifieds. Advertise the car for no less than the full payoff amount. Inform the buyer that the title needs to be retrieved from a lender before the car sale can be finalized. Offer a signed contract stating that the car title will be turned over to the buyer as soon as the title loan is paid. Even if you sell your vehicle, you are still liable for the amount of the title loan owed. Make sure you use the funds from the car sale to pay the title loan in full.
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Tips & Warnings
Some dealerships, such as CarMax, will pay cash for your vehicle even if you do not purchase a new car there. Be honest with the dealership and ask if it can help with paying off the title loan and retrieving the title as part of the sale.
If you sell your vehicle without paying the outstanding title loan attached, the new owner does not assume responsibility for the title loan. While the lender holds the title, it can place other liens on your assets to retrieve its money. Read the terms of your loan for specific details.
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