Is Vehicle Impoundment Required for Auto Title Loans?
2 Answers
Generally, there are two approaches: with or without vehicle impoundment. Below are the relevant details: Non-impoundment policy: The borrower only needs to register the vehicle as collateral at the local DMV and submit the required documents to the lending institution to process the auto title loan. However, due to the higher risks associated with non-impoundment, lenders typically require the installation of a GPS tracking system in the vehicle to monitor its usage. The cost of this system is borne by the borrower. Impact: Generally, opting for non-impoundment allows the borrower to continue using the vehicle while securing financial liquidity—a win-win situation. However, this option involves higher associated costs.
I have a neighbor who took out a car title loan last year. He needed some money for his business cash flow, so he used his car as collateral. I asked him if he had to surrender the car, and he said normally no—he just had to go to the lending institution to complete some paperwork and register the lien information, then he could drive the car home and continue using it as usual. However, the contract clearly stated that if he missed several consecutive payments, they had the right to repossess and auction the car to cover the debt. The whole process took half a day at the bank—just filling out forms and signing—and as long as he made his monthly payments on time, nothing happened. But by the end of the year, he was tight on funds and almost defaulted. Luckily, he borrowed money from a friend just in time to avoid losing the car. I think the key is to choose a reputable, established institution. Don’t rush into deals with those small street lenders—they often demand you surrender the car, which is way too risky. It’s best to check online reviews or ask around for others’ experiences first. After all, a car is a major asset, so staying cautious is the right move.