How to Get a Debt Settlement on a Title Loan

A settlement deal can prevent repossession.
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Title loans provide a fast way to get cash when you need it. However, the lender takes the title to your property as collateral for the loan. If you default, you risk not only damaged credit but also the loss of your property altogether. When faced with losing your car or other property because of difficulty paying a title loan, debt settlement can prove an attractive option. Depending on the lender and your negotiation skills, you might settle your debt for as little as 25 percent or as much as 75 percent of the total you owe.

Step 1

Review your title loan documents. You need to know the amount you currently owe on your title loan.

Step 2

Look up your car's estimated value on the Kelley Blue Book website. To get a reasonably accurate estimate, write down your car's make, model and year as well as any special features it has. This information will help in estimating your car's value.

Step 3

Compare the amount you still owe on your title loan with your car's estimated value. If your car's estimated value is much less than your current debt, the loan company may be more willing to negotiate a settlement. In such a case, the costs of seizing and reselling the car combined with the low amount the lender can expect to get for the car may make settlement more attractive.

Step 4

Cease making payments on your loan. A title loan lender has little incentive to negotiate if your payments arrive regularly. Your lender may take you more seriously after 90 days with no payments.

Step 5

Decide how much you can afford as a settlement payment. Most lenders will expect you to offer at least 20 percent, though they may counteroffer for more.

Step 6

Send a settlement request letter to the title loan lender. Include your name, contact information and loan details, such as the initial loan amount and the amount you currently owe, in your letter. Add the car's current estimated value and your settlement offer, and explain why you cannot repay the loan.

Step 7

Negotiate with the lender. Often, lenders either refuse an initial settlement offer or provide a counteroffer. Negotiate until you receive an offer you can afford. Persistence may pay off.

Step 8

Get the settlement offer you accept in writing. Verbal agreements do not typically stand up in court.

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