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How to Get a Debt Settlement with an Auto Title Loan

How to Get a Debt Settlement with an Auto Title Loan

How to Get a Debt Settlement with an Auto Title Loan

Auto title loans can provide a fast and easy way to get cash when you need it. It’s so easy to get approved for auto title loans because your lender is using the title of your car as collateral for the loan. If you default on your loan, you are at risk of damaging your credit score, and even worse, losing your car to repossession.

When face with losing your car because of difficulty paying off a title loan, a debt settlement can prove to be a very attractive option. Depending on the lender you are working with and your ability to negotiate, you might be able to settle your debt for as little as 25 percent of the total you owe.

Here are the things you should do in order to get a debt settlement on your auto title loan:

Review your title loan documents. You will need to know the ins and outs of your loan as well as how much you currently owe on your title loan.

The next thing you’re going to want to do is look up your car’s estimated value on a reputable site such as Kelley Blue Book. In order to get a reasonably accurate estimate, make sure to list your car’s make, model, and year, as well as any special features or damage it has.

Next, you will want to compare the amount you still owe on your auto title loan to 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 a case like this, the costs of seizing and reselling your car combined with its low value will make any money they can recoup from you an attractive option.

The next thing you’ll want to do – and this seems somewhat counterintuitive – but you’re going to want to stop making payments on your loan. This is because even the best auto title loan lenders will have little incentive to negotiate a debt settlement deal if your payments are arriving regularly. Your lender may take you more seriously after several months of no payments.

Next, you’re going to want to figure out just how much you can afford as a settlement payment. Most lenders will expect you to offer at least 20 percent of what you owe, though of course you should be prepared for them to counteroffer for more.

Send a settlement request letter to the title loan lender you have been working with. Include your name, contact information, and loan details. That includes things such as the initial loan amount and the amount you currently owe. Add the car’s current estimate value and your settlement offer, and explain why you will not be able to repay the loan.

Negotiate with the lender. Often, lenders will either refuse an initial settlement offer or provide a counteroffer. Negotiate until you receive an offer you can afford. It is important to be persistent.

If you are granted a settlement offer from your lender, make sure that you get proof of it in writing. That way, you will have proof that a settlement was reached if you should reach problems further down the road.

Here are a few tips and warnings to keep in mind regarding getting a debt settlement with an auto title loan.


  • If a lender believes they have little chance of collecting the full amount from you, they will potentially be more interested in a debt settlement.
  • If you are finding yourself having trouble negotiating a settlement on your own, you can hire a debt settlement company to help you out.
  • When you are first starting the negotiation process, start with a low settlement number first. This way, you will have some room to negotiate upwards if the lender refuses your initial offer. If you start with a high offer, a lender’s counteroffer may turn into something more than you can reasonably afford.
  • Avoid debt settlement companies that charge upfront fees. Instead, focus on finding companies that only charge you after you.


  • While missing payments can help encourage your auto title loans lender to accept your settlement offer, there is a rather large list of risks. First off, a creditor will likely behing collections efforts and report your missed payments to credit report bureaus. Second, a lender can sue you for a repayment if it doesn’t agree to settle. Also, some states allow lenders to repossess and sell your car even if you owe just a portion of what the car’s total value is.

Seeking out a debt settlement loan can be a risky road to take, but if you have run out of options, it could be a great way to put your car title loan in your rear view.

Good luck!

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