Title loans are a great way to borrow money when you can't get approved for an unsecured personal loan. These loans have gained popularity in California over the past decade, as most lenders offer interest rates of around 36%. But what's the plan if you default on the loan? Any borrower needs to be aware of the fundamental laws governing California title loans. Additionally, it is important to understand what happens if your vehicle is repossessed and what to do if you default on your loan. Read on to understand the repossession process and what consumer protections you have.
California Laws Regarding Title Loan Repossessions
Specific timeframes and procedures must be followed if a lender wishes to repossess a vehicle. These regulations apply to all title loan companies licensed to offer loans in California. Under the California Civil Code, lenders may initiate repossession proceedings upon a borrower's default. Default typically occurs when you miss a payment.
Repossession laws in California do not specify a set number of days after a missed payment that triggers a repo agent to take the vehicle. However, most title loan companies offer a grace period of days or even weeks before repossessing the car.
Under California law, a licensed lender can repossess your vehicle as soon as you miss a payment. There is no legally required grace period for title loans, and lenders aren't required to give you advance notice before repossessing your vehicle. After repossessing your vehicle, the lender must provide you with specific written notices about how you can reclaim the vehicle and any upcoming sale of the car.
What Happens After A Title Loan Company Repossesses Your Vehicle?
After your vehicle is repossessed, you have the right to get it back before it's sold at auction. Similar to when a lender notifies you that they plan to repossess your car, they also must let you know that the vehicle will be sold at auction. They must also tell you when and where the auction will take place and how much outstanding debt you owe.
To reclaim your vehicle, you have two options under California lending laws. You can reinstate the loan by paying all past-due payments, including late fees and repossession fees. By doing this, you will restore the original loan terms, and the vehicle will be returned to you. California law allows one reinstatement every 12 months,s and this can be done a maximum of twice over the life of the loan. Lastly, your lender must give you at least 15 days' written notice before selling your vehicle. And this notice must be sent within 60 days of repossessing your vehicle.
A lender can use the auction proceeds to cover the outstanding loan balance, repossession costs, and any additional expenses associated with storing the vehicle. If your vehicle sells for more than what you owe, including the outstanding loan balance and reasonable repossession costs, the lender is required to return any surplus funds to you.
Due to the risks associated with title loans, it's best to use them only in a financial emergency. It's easy to get cash from a California company that offers online title loans with no in-store visit or inspection. However, it's not always easy to make your payment on time each month.
Your Rights & Protections When Facing A Title Loan Repossession
California law provides certain rights and protections to consumers facing repossession. One important right you have is the ability to reclaim the vehicle after it has been repossessed. Yes, you only have a limited time before it's sold at auction, and you'll still have to pay fees. However, lenders can only sell your vehicle after you have been informed of an impending auction. After that, they must give you time to get current on the payments.
As with any other loan default, title loan customers in California have the right to know how much they owe and the specific costs associated with the repossession and sale of the vehicle. Your lender must provide an itemized breakdown showing these details before selling the vehicle. After the car is sold, they must notify you of the sale price and itemize the amount due, including what you may receive afterward.
Lenders offering auto title loans in Los Angeles and throughout California are prohibited from using aggressive collection tactics or engaging in any illegal activities during repossession. They can't use force to take the vehicle from you, and certainly can't threaten physical violence to pay back your loan. They also can't take your vehicle from an enclosed garage. Any title loan company in California must hold an active lending license and risks losing it if it engages in illegal activity during the repossession process. Besides, if a lender violates state laws regarding collection practices, you may be able to invalidate the repossession and seek additional damages.
Conclusion Regarding Repossession Regulations in CA
Repossession laws in California can be challenging, but there are consumer protections in place if you're working with a licensed title loan company. If you face an imminent repossession, inform your lender that you understand your rights and try to work with them to get your vehicle back. Most title loan providers want to avoid the drawn-out legal process that takes place after you default, and they'll gladly work with you to establish a new repayment plan and get you back on track with a title loan.
Even if you're past the point of working with your lender and are currently facing a public auction of your vehicle, there are still steps you can take to move on from this as quickly as possible. Again, let your lender know you're entitled to any additional proceeds from the sale of your vehicle after the initial balance and fees have been settled. You also have the right to add a brief statement on your credit file detailing the circumstances of the default. However, the default and repossession will still appear on your credit report for several years.
Contact California Title Loans at 855-339-1001 to learn how we can help you avoid a title loan repossession. We may be able to help you by offering pre-approval to refinance your title loan at a more affordable rate, or by connecting you with a local California company that will buy out your existing loan. Either way, we'll work to make things as easy as possible, and hopefully, you can avoid repossession.