A common question we hear from our readers is what happens if they don’t repay their title loan. This often comes up with 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 a lending option.

You won’t go to jail if you fail to repay your loan. Defaulting alone won’t get you arrested or criminally charged. The exceptions to this are fraud, like hiding or selling the car, or ignoring a court order. That said, there are significant repercussions if you fall behind on your monthly 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 repossession company will take your vehicle without your authorization, and there’s not much you can do about it if they’ve complied with the relevant laws in your state. They have every legal right to repossess the car when you legally default on the contractually obligated payments.

Beyond losing your vehicle, you’ll also owe a lot of money to get it 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 storage fees at a tow yard. Worse, you may still owe the lender if your car sells at auction for less than you owe. In many states, they can hold you responsible for the balance due after accounting for the vehicle’s sale price.

Why You Won’t Go To Jail If You Default

In short, jailing someone for being unable to repay a debt is illegal. The United States abolished debtor’s prison nearly 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 won’t happen if you default. Sure, they can take you to court and sue you for any amount owed beyond what your vehicle sells for at auction. But a lawsuit can happen for most unpaid debts, and any legal action would be civil. You won’t be subject to criminal prosecution for defaulting on a loan.

My Lender Says I Will Go To Jail – What Can I Do

As a consumer, you have significant protections that limit credit harassment and actions like this by lenders. The Fair Debt Collection Practices Act covers third-party debt collectors, and state laws add more protection. For instance, someone with a title loan in Houston is protected not only by state laws but also by city rules that limit loan amounts and renewals. Don’t listen to a lender or 3rd-party bill collector who says you’ll go to jail for missing monthly payments. Instead, document the situation and consult an attorney or your state’s bar association for further assistance.

Avoid Losing Your Vehicle With A Title Loan Default

So now we know jail isn’t an option for someone who missed payments. But how can you prevent your vehicle from being 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 possible once you fall behind on payments.

To avoid a default and the subsequent loss of your vehicle, you must be proactive and never let it get to this point. That means contacting your lender to let them know you may miss a payment soon. Or consider working with your lender to arrange an alternative payment plan or a loan buyout to avoid a potential default. You can also ask them about refinancing for a better repayment term and lower interest rates. 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 lender 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. You don’t need to worry about going to jail or facing criminal legal issues. Instead, we’ll try to lower your interest rate, help you get back on track with 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!