Can You Go to Jail for Not Paying a Title Loan?


Saturday, October 23, 2021 / 10:50AM /Sponsored post by Sahzadi Sarah /Header Image Credit: With TFC Title Loans


The title co-borrower is an individual who registers the credited dwelling in the common property. A co-borrower performs on behalf of the co-borrowers, as well as in the interests of oneself and the co-borrowers. With their common consent, all the necessary actions related to the registration, receipt, and servicing of the loan.


Housing acquired with the help of a loan is registered in the ownership of the borrower and his or her spouse or only one title co-borrower. This acquired housing is formalized by the title co-borrower as a pledge.


As a rule, the rest of the co-borrowers do not become the owners of the acquired housing, then why are they needed? Other co-borrowers are involved in order to increase the borrower's income by adding their average monthly salary and thereby increase the amount of the loan being issued. They are also fully responsible for repaying the title loan.


What is Title Loan?

A title loan allows you to borrow money using property you own as collateral such as a car, boat, or mobile home, you can use this online calculator to estimate how much money you can get with the title loan. You transfer ownership of the motor home or other property when you receive a loan, and then regain ownership if you pay back the loan.


How Does a Title Loan Work?

The most common form of a title loan is a car loan. In this case, the potential borrower must own a car directly and sign the title deed to the car loan company. The lending company provides a borrower with up to 25% of the total value of the car and retains ownership of the car as collateral in the event of a default.


Typical car loan amounts are $ 1,000 although they can be higher. Borrowers can pay off the car loan in one installment after a month or pay off the loan in installments over two years. If the borrower fails to repay the title loan as per the repayment agreement, the vehicle can be returned immediately by the car title loan company.


The lending company also has the ability to allow a borrower by default to make payments only on interest on a monthly period effectively prolonging the loan amount indefinitely until it is repaid. Reputable lenders can charge exorbitant interest on car title loans making it extremely difficult to pay off the loan.


Title Loan Special Considerations 

Title loans may seem attractive to people with poor credit or people in financial positions who need quick cash. However, there are exorbitant costs associated with title loans, especially car loans, that should give borrowers a break.


The Annual Percentage Return (APR) on an average car title loan can be as high as 300% and is almost always above 100% interest. A high APR can cause a financial treadmill where borrowers can never catch up and pay off the principal. Car lenders are sometimes called "predatory lenders" because they tend to prey on people who need money in emergencies.


Criminal Liability for Non-payment of Title Loan

Let's see if prison is real if the title loan is not paid. Criminal prosecution is a very common fear among people who have stopped paying their loans on time. This is what collectors and bank representatives use when collecting overdue debts. Dealing with the debtor's fears is an integral part of the work of collectors. Fear of publicizing debts to friends, relatives, neighbors, fear of losing a job, fear of shame, fear of criminal liability - these are just some of the debtor's fears used by claimants.


The US Penal Code Does Criminalize:


  • illegal receipt of a loan;
  • taking a loan without intending to return it;
  • malicious evasion of payment of a debt confirmed by a court decision.

Non-payment of a loan can lead to jail with a debt amount of more than 1.5 million


USD only if the following conditions are simultaneously met:

  • when receiving loans, you provided fake documents;
  • you did not have a real opportunity to pay off title loans;
  • you almost immediately stopped paying on title loans without any objective reason.


If you paid loans for a long time and have a good credit history, then you should not worry about bringing you to criminal liability (even if you have a number of fresh microloans and loans that were taken in order to somehow stay afloat (refinancing)).


What Will Happen If a Title Loan is not Repaid?

Any financial problems of a debtor, as a result of which one cannot make regular payments provided for by the loan agreement. This leads to the fact that the bank begins to apply penalties. Moreover, in case of violation of the payment schedule, the credit institution has the right to file a lawsuit against the unscrupulous borrower. At the same time, it is important to understand that the likelihood of the bank winning such a case is extremely high.


Based on the results of a court decision, the bank usually receives a writ of execution. This is then transferred to the bailiff service where enforcement proceedings are initiated. In such a situation, a debtor runs the risk of losing the liquid property since today in the USA the powers of the bailiffs are quite large.


In the bankruptcy procedure of an individual, collectors and creditors are strictly prohibited from contacting directly with the debtor. Interaction with creditors is carried out through a financial manager approved by the court. There will be no more calls and threats to bring you to criminal responsibility.


Is There Anything You Can Do to Avoid Being Sent to Jail?

If title loans are not paid, they can go to jail only for serious fraud related to forging documents or selling the collateral. In order not to bring the case to court and confiscation or seizure of property, follow the pieces of advice:


  • Do not delay the situation until the accrual of fines and penalties for the delayed title loan;
  • If difficulties arise with the payment of a debt, contact the bank, provide supporting documents (certificate of lower-income, disability, breadwinner, etc.) and ask for the restructuring of your title loan;


  • You can also ask for a loan vacation due to the temporary delay in monthly payments.


In any case, the decision will be up to the lender. Banks are interested in repaying title loans and microloans. So, they often make concessions to respectable borrowers who find themselves in a difficult life situation.


Questions about whether they can be imprisoned for non-payment of the title loan are inspired mainly by human fears and psychological pressure from the lender and collectors. In fact, the most that banks or MFIs can achieve from unscrupulous borrowers is the seizure or confiscation of property.


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