How Repossession Works with Auto Pawn Loans
An auto pawn loan is a secured loan issued against auto equity, and is often the quickest way for someone with bad credit to get cash. In order to get approval for a car title loan, however, you will have to prove that you own the car used as collateral, and your car loan must be paid off or nearly paid off for you to qualify.
Whereas conventional pawn agreements involve the pawnbroker taking possession of the collateral while the loan gets paid back, car title loan lenders will allow you to keep and drive your automobile while you repay a pink slip loan. This makes it harder for the car title loan company to take possession of the vehicle should you default on your loan.
To recover the collateral, the lender will take action to have the vehicle repossessed and sold. Repossession is the ultimate penalty for not repaying an auto pawn loan. But before it gets that far, most lenders will attempt to contact you and collect the payment.
It can cost your lender a lot more than the debt you owe them to repossess and sell the car. That is why they will only loan you up to 50% of the car's value when you take a title loan. After all, they need to ensure that they will at least recover the money you owe them.
Because the car title used as collateral is usually worth at least twice as much as the outstanding debt, most borrowers, like you, will do everything they can to maintain possession of the pink slip.
In order to make repossession easier, some lenders require you to give them a duplicate set of keys. In states like Phoenix, however, this is illegal. When the lender has to repossess your vehicle without your keys, they will usually get a set of keys cut using the key code found on the title slip, or hot-wire or tow the vehicle.
An agent of the lender usually visits your home or place of business to take possession of the vehicle. If the lender managed to sell the repossessed auto for more than you owe them, they should return the excess funds to you. If the car sells for less than you owe the lender, however, you may still be liable to pay the difference under some agreements.
Auto pawn loans in Phoenix are available from Wilshire Consumer Credit. This reputable and licensed lender offers flexible terms to help you repay your loan conveniently, so you can avoid repossession.
Apply using the form here and get approved for your auto pawn loan in minutes!