Car Title Loans

Getting a loan like a car title loan for an urgent cash need can be a lifeline when navigating a difficult financial situation or encountering unforeseen expenses. When it comes to repaying the loan, it is important to stay on top of the payment schedule to avoid adverse consequences of late payments such as late fees and higher interest charges. A loan default that remains unaddressed by the borrower can result in serious actions taken by the lender or loan servicer, including recovery of the vehicle through repossession, and even in some extreme cases, a lawsuit.

If you are considering to apply for a title loan serviced by LoanMart and wondering if doing so could ever result in a LoanMart lawsuit, rest assured that getting sued by LoanMart is very unlikely, even if you fall behind on a payment or two – keep reading to find out what to do when you’re not able to make a payment on time, and why legal action is not likely!

Potential Legal Issues When Defaulting on a Title Loan Serviced by LoanMart

All title loan borrowers must sign a contract (the loan agreement) as part of the title loan closing process. While it’s a good idea for borrowers to carefully review all the financial loan terms such as the loan amount, interest rate, loan fees and payment schedule, borrowers are also well-advised to carefully read the fine print of the contract they are signing. In particular, borrowers should thoroughly read the sections that define their rights and responsibilities, what events constitute a loan default, and what rights and remedies the lender has and what actions the lender or applicable loan servicer may take if there is a default.

While it’s typical for loan agreements to legally define default as having missed one or several loan payments, the contracts for title loans typically include additional provisions that define loan default. These default provisions can include things like:

• Removing or trying to tamper with the lender’s lien against the vehicle
• Damaging the vehicle
• Removing the vehicle from the United States without prior authorization from the lender

The lender’s rights and remedies are usually defined in a separate section of the loan agreement. Typical contract provisions that outline the lender’s remedies include the right to declare the entire outstanding loan amount due immediately and the right to file a lawsuit against the borrower for breach of contract. Title loan agreements usually also include the right to recover the vehicle through repossession and – depending on the terms of the loan contract – the right to sue for additional amounts such as court costs and legal fees – in addition to the amount due under the loan itself.

What Type of LoanMart Lawsuits Could Result from Defaulting on a Title Loan?

As previously mentioned, getting sued by LoanMart is highly unlikely as litigation is usually used as a last resort and would only follow extensive attempts to collect on a loan and work with the borrower. In the rare scenarios where a borrower is sued by LoanMart, the following types of legal actions are possible:

• Seeking money judgment on the debt: seeking a money judgment means that the lender or loan servicer is trying to use legal proceedings in an attempt to secure the repayment of the outstanding loan amount. If successful, the court will issue an order for the payment of the outstanding amount. Lenders can seek money judgments both through the small claims courts or the applicable regular courts. Upon winning the lawsuit, repayment of the loan might be enforced through methods such as wage garnishment.
• Replevin action: replevin is a legal proceeding that is intended to seek the recovery of collateral that cannot be located or is wrongfully held by the borrower. If the replevin action is successful, the court will issue a writ of replevin that directs the applicable law enforcement agency to recover the car or truck from the borrower.

How Can I Avoid a LoanMart Lawsuit When I Can’t Afford My Title Loan Payments?

If your financial circumstances have taken a turn for the worse after you’ve borrowed through a title loan, avoiding collection calls and messages from your lender or servicer may feel like a natural reaction. However, the best approach you can take is to be open and transparent about your situation and proactively communicate with your lender or servicer. Depending on your loan account status and history, you may qualify for a solution that works for you! This could include changes to your account that better align your due dates with when you get paid, temporary relief from title loan payments through an extension, or even a long-term modification of your loan.

In several states, you also have a legal right to cure a loan default within a specified time period. Until the expiration of this right to cure period, there’s no need to worry about a lender or loan servicer potentially repossessing your vehicle.

Filing a lawsuit, whether for money judgment or replevin, is an expensive undertaking for lenders or loan servicers, often involving hundreds of dollars in fees. Therefore, lenders and loan servicers only resort to legal action and lawsuits as a very last resort, after having exhausted regular collection attempts.

Reasons Other Than Default for Which You May Become Subject to a LoanMart Lawsuit

Besides defaulting on a loan and avoiding a resolution to the loan default, there are additional – highly unlikely – scenarios that could result in a consumer getting sued in connection with a title loan serviced by LoanMart. People who are thinking about engaging in the below financial crimes should be aware that a lawsuit is a potential consequence:

• Making payments with fraudulent checks: writing fraudulent checks is a financial crime
• Committing application fraud and misrepresentations: this can include applying with a stolen or falsified identity, or applying with forged vehicle titles.

Final Thoughts on Title Loans and LoanMart Lawsuits

Getting sued if you are having a problem with a title loan serviced by LoanMart is unlikely for borrowers who maintain open and transparent communication with LoanMart. Being up-front when facing payment difficulties is the best step to keeping the loan experience positive for all involved parties.