A common question we hear from our readers is what happens if they don’t repay their title loan. This often comes up from borrowers who are already behind on their payments. We also hear from people who are curious about how these loans work and are trying to decide if online title loans are too risky of a lending option.

The bottom line is that you won’t go to jail if you fail to repay your car title loan. Not only that, you won’t get arrested for defaulting on your loan or face any criminal charges. With that, there are some significant repercussions if you fall behind on your title loan payments or default on your loan.

So I Won’t Go To Jail, But What Happens If I Default On A Title Loan

The most immediate consequence of defaulting on a title loan is that your car will likely be repossessed. The lender or a 3rd party collection agency will take your vehicle without your authorization and there’s not much you can do about it if they’ve followed the relevant laws in your state. They have every legal right to repossess the car when you legally default on the contractually obligated payments.

Aside from losing your vehicle, you’ll also owe a lot of money to get the vehicle back. Even if the lender is holding your car, you are still assessed interest charges on the loan, and they’ll likely hit you with daily fees for holding the vehicle at a tow yard. Worse than that, you may still owe the lender if your car is sold at auction and brings in less money than what you owe the lender. In most states, they’ll hold you responsible for the balance due after accounting for the vehicle’s sale price.

Here’s Why You Won’t Go To Jail If You Default On A Car Title Loan

In short, jailing someone for being unable to repay a debt is illegal. This debtors’ prison was abolished in the United States over 200 years ago! That’s not to say that some unscrupulous lenders and bill collectors won’t threaten you with jail time or something along those lines, but it’s not going to happen if you default on a title loan. Sure, they can take you to court and sue you for any money owed above and beyond what your vehicle sells for at auction. But any legal action would be a civil matter, and you won’t be subject to criminal prosecution for defaulting on a loan.

My Lender Says I Will Go To Jail For Not Paying My Title Loan – What Can I Do

As a consumer, you have significant protections that limit credit harassment and actions like this by lenders. It all starts with the Fair Debt Collection Practices Act, and additional legal frameworks are in place for each state that protects you if there’s a title loan default. For instance, a borrower in Richmond, VA, is not only protected by their state laws but also has the backing and protection of city rules and regulations that regulate bill collectors and repossession companies. Don’t listen to a lender or 3rd party bill collector if they say you’re going to jail for not making the monthly title loan payments. Instead, document the situation and consult an attorney or your state for further assistance.

Avoid Losing Your Vehicle With A Title Loan Default

So now we know that jail is not an option for someone who didn’t make their title loan payments. But how can you avoid having your vehicle sold at auction after a default? Vehicle repossession is a real risk, and you should assume a creditor is making arrangements to repossess the car and sell it as quickly as they can once you fall behind on the payments.

To avoid a default and subsequent loss of your vehicle, you must be proactive and never get to this point. That means contacting your lender to let them know there’s a possibility you will miss a payment shortly. Or consider working with your lender to devise an alternative payment arrangement or loan buyout to avoid a potential default. You can also ask them about a title loan refinance for a better repayment term and lower interest rates. The bottom line is that you must communicate with your lender and let them know you’re doing all you can to “make things right” and get back on track with the payments. It doesn’t cost you anything to ask your title loan company if they’re willing to lower your payment or refinance your lending terms.

If you’re in danger of default or repossession, Contact Premier Title Loans at 800-250-6279 to learn more about your refinancing options. There’s no need to worry about going to jail or dealing with criminal legal issues. Instead, we’ll help lower your interest rate, hopefully get you back on track with the payments, and avoid vehicle repossession.

Jessica Chase

Jessica has been working in the title loan lending industry since 2012. Before that, she managed a team of customer service representatives for one of the largest payday loan companies in the US. Since coming to Premier Title Loans, she’s overseen our sales and marketing department and looks forward to educating consumers on their different financing options. Jessica is always open to feedback and questions related to short term loans!