Many people who need fast cash rely on title loans. Unlike a traditional personal loan, a title loan is typically processed quickly, which means you can get your hands on the cash you need as soon as possible. The eligibility requirements are also different for title loans, so you may qualify for a title loan even if you don’t qualify for a traditional personal loan.
Title loans are secured loans. If you want to borrow money with a title loan, you must use the title to your vehicle as collateral. You can keep driving your vehicle while you make payments, though. However, the title loan company will put a lien on your title until you have paid off your debt.
Because your car is used as collateral, you might be wondering whether you will still qualify for a title loan if you already have a lien on your vehicle. Can you get a title loan with a lien? Here’s what you need to know:
How Do Liens Work?
Before you find out whether you can get a title loan with a lien, it’s important to understand what liens are and how they work.
A lien is a legal right to property. By putting a lien on your vehicle, the lienholder is staking a claim to the property.
If you take out a loan using your vehicle as collateral, the lender will put a lien on your title until your loan has been repaid. This way, if you default on your loan, the lender has the legal right to take possession of your vehicle to satisfy your debt.
Can You Get a Title Loan If Your Car Isn’t Paid Off?
If you are still making payments on your vehicle, your lender most likely has a lien on your vehicle. If you need fast cash, you may be worried that this will make it harder for you to get a title loan. It is possible to qualify for a title loan even if there is a lien on your vehicle because you are still paying off your auto loan.
Your eligibility in this situation will depend on several factors, including:
- Your Vehicle’s Resale Value
- Your Equity
Your Vehicle’s Resale Value
Your vehicle is used as collateral, so your title loan company should know how much it is worth before determining if you are eligible for another loan. To calculate your vehicle’s resale value, your lender will evaluate its make, model, year, mileage, condition, and trim level.
Your equity is the difference between your car’s resale value and the amount you still owe on it. For example, if your car is worth $10,000 and you owe $2,000 on it, you have $8,000 of equity.
You must have equity in your vehicle to qualify for a title loan. If you owe more than your vehicle is worth, you are not eligible for a title loan.
The bottom line is many people with only a few payments left on their auto loans qualify for a title loan. Everyone’s situation is unique, which is why it’s best to contact your title loan company to find out if you qualify even though you have a lien on your vehicle.
Can You Get a Second Title Loan?
If you are still making payments on your title loan, you may want to know whether you can take out a second title loan since your vehicle has a lien on it. Taking out a second title loan is not the answer in this case. A better option would be refinancing your title loan.
Refinancing involves taking out a new title loan to pay off your current title loan. In other words, the new title loan replaces the old one.
What Are the Benefits of Refinancing?
There are a number of benefits to refinancing your title loan, including:
- Lower interest rate. If your credit score has improved or the market has changed since you initially took out your title loan, refinancing could help you secure a lower interest rate, which could save you a significant amount of money over the course of the loan.
- More affordable payment. If you are able to extend your loan term or lower your interest rate, refinancing could make your title loan payment more affordable.
- Avoid defaulting. If you can’t afford to make your current title loan payments, you may be able to refinance your loan to avoid defaulting on your debt. This can help you avoid the serious consequences of defaulting.
- Borrow more cash. Some people may be eligible to borrow additional cash when they refinance their title loan. If you’re short on cash, this is a great way to secure the money you need.
These are some of the many reasons why so many people choose to refinance their title loans.
When Should You Refinance Your Title Loan?
Refinancing may not be right for everyone. You may want to consider refinancing your title loan if:
- Your credit score has improved. Take a look at your credit score before applying for refinancing. You may qualify for a lower interest rate if your credit score has improved since you applied for your title loan. The lower the interest rate, the less you will pay in interest.
- You can’t afford your payment. If you are struggling to keep up with your title loan payments, refinancing might be the best way to make your debt more manageable.
- Interest rates have gone down. Keep an eye on the market. If interest rates have gone down since you took out your loan, you may now qualify for a better rate. Even a slight drop in rates could save you hundreds of dollars over the course of the loan.
- You need more cash. If you need to borrow more money, you may want to consider refinancing to see if you qualify for additional cash.
How to Apply for a Title Loan
The process is the same regardless of whether you are applying for a title loan or refinancing with 1(800)CAR-TITLE®. Here’s what to do:
- Contact our loan specialists. You can either call 1-800-227-8485 to speak to a loan specialist directly or submit your information using the form on our website. If you choose to submit an online form, a loan specialist on our team will get in touch with you shortly.
- Get a free loan estimate*. You can find out if you are approved for a title loan and if so, how much you can borrow, in a matter of minutes. All you need to do is provide some basic information about your vehicle to your loan specialist.
- Finalize your loan. If you’re comfortable with the terms of your loan estimate, the next step is signing and submitting the required documentation. Your loan application cannot be processed until this step is complete, so work with your loan specialist to get everything in as soon as possible.
- Get fast cash. Your money will be available soon after your loan is approved. You can pick it up in person or ask to have it sent to you via a check or wire transfer.
Don’t let a lien on your car stop you from getting the cash you need. Contact us today to start your title loan or refinancing application.
*Loan approval is subject to meeting the lender’s credit criteria, which includes the demonstration of the ability to repay the loan. Not all applications will be approved.