4 Important Steps To Follow After Paying Off Your Car Equity Loan
Posted on: 19 June 2015
A car equity loan is a smart way to secure cash when your funds run low or emergency financial situations arise. You must pay this loan back according to the given payment schedule or the company has the right to pick up your vehicle. Once you pay off the loan, the lien is taken off your title and you resume full ownership of that car. Although car equity loan companies strive to maintain clear records, it is still your responsibility to retain documents proving you paid off the money owed. That way, if disputes come up in the future, you can simply present the documents and clear up the misunderstanding in an instant. Here are four important steps to follow that ensure you have the documents needed for proof if a dispute occurs.
1. Obtain Confirmation
When you make your final payment, the system should produce a receipt and confirmation number. Grab a printout of the receipt and jot down the confirmation number on the bottom if it is not already listed on the page. You may also receive a letter from the car equity loan company thanking you for paying off your loan in full and on time. These documents clearly show that you fulfilled your end of the contract without racking up late fees or other charges. The account should zero out and remain at that value until the loan is officially closed.
2. Scan Receipts
Use your scanner to digitize the final payment receipt and letter detailing the payoff acknowledgement. You want to save these documents in the digital format in case you lose the original copies. You can use the digital copies in email correspondence with the loan company if a computer or user error alters your loan values or status. You should save the scans on your computer, an external hard drive and cloud storage system for easy retrieval in the future. If you do not have access to cloud storage options, consider emailing the document as an attachment to your personal inbox and flagging it as saved there.
3. File Paperwork
Staple the hard copies of your receipt and letters together, and then place them in your home or workplace's private file cabinet. Make sure the folder holding the documents is properly labeled, so you can find the paperwork with ease when needed. Chances are, you will never again look at the documents, but it is good to have them on hand. Keep the paperwork filed away until you sell the vehicle attached to the car equity loan.
4. Obtain Clean Title
As soon as you make your final payment, the car equity loan agency should close your account and issue lien release paperwork to the appropriate state licensing officials. The state licensing agency must process the release paperwork to remove the lien from your title. The total processing time can take up to 30 days to complete. Once the clean title is ready, you should immediately go down to your local licensing department and pick up a copy for your records. You can use the clean title to show that the loan agency received the payoff amount on schedule and subsequently released their interest in that vehicle.
Plan For Unexpected Expenses
Although car equity loans are always available, it is wise to keep your finances in check to avoid procuring too much debt. A solid budget can help you save money towards an emergency fund. Even a few dollars deposited each month will eventually grow to a fund that you can use for car repairs, housing costs and medical bills that unexpectedly crop up. Of course, in the meantime, you can rely on car equity loans to get you out of close scrapes and help you avoid borrowing from friends and family members.
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