If you are lime most people, you got a loan when you purchased your vehicle. Until the loan is paid off, the lender will have a lien on the title to the vehicle. However, it may still be possible to get a title loan. What is a car title loan? It is when the equity […]
If you are lime most people, you got a loan when you purchased your vehicle. Until the loan is paid off, the lender will have a lien on the title to the vehicle. However, it may still be possible to get a title loan. What is a car title loan? It is when the equity in a vehicle is used as collateral to receive cash quickly. Let’s look at your options when it comes to getting a title loan using a financed vehicle.
Getting a Title Loan on a Financed Car
The steps to getting a title loan on a financed car are the same as those to get the same loan on a car that is paid off. The first step is to apply either online or at a title loan location closest to you. Next, you will submit the application and wait for the lender’s decision. In some cases, you will need to schedule an inspection or send photos of the car prior to getting loan approval.
Once the loan application has been approved, you will get your money in as little as an hour. As a condition of the loan, the lender will now have a lien on your title. This means that it may have the right to seize your car in the event that you don’t pay it back. It may also be true even if you have made payments on your original car loan.
You May Not Keep the Entire Loan Amount
In some cases, when you get a title loan on a financed car, you will actually receive money to pay off the existing lien on your vehicle. You can then keep whatever is left over to use however you see fit. Let’s say that you were approved for a $5,000 title loan using the title for a vehicle that you owe $2,000 on. Instead of receiving the $5,000, you would receive $3,000 with the rest of the money going to your original lender.
Typically, you would then repay the entire amount of the loan under the terms that you agreed to with the title lender. The potential upside is that your vehicle is now paid off, which means that you own it outright. After you repay the title loan, there is no more debt on the vehicle and you can do whatever you want with it. In fact, it may be possible to apply for another loan using the same vehicle.
Title Loans Vs. Auto Equity Loans
Let’s say that an individual has $3,000 equity in his or her vehicle. With an auto equity loan, that person may borrow a percentage of that equity using the vehicle as collateral. In most cases, a vehicle owner doesn’t need a clear title to get such a loan.
However, an individual may be able to get more from a title lender because the amount of the loan is based on the value of the vehicle as opposed to how much equity is in it. It is rare that a driver who is still making car payments will have more equity than the car is worth.
You Retain Ownership of the Vehicle
While the lender puts a lien on the title, you still get to drive the car and otherwise use it as you would like. It may even be possible to trade or sell the vehicle assuming that it generates enough cash to pay back the loan prior to doing so. Anyone who may be interested in selling or trading a vehicle with a title loan lien on it may benefit from speaking to their lender first.
It May Be Possible to Refinance a Title Loan
It may be unrealistic to expect a person to repay $2,500 or $3,000 in a matter of 30 days. The good news about title loans is that it may be possible to refinance them to help keep up with the payments. While this may have no bearing on your credit score, making timely payments can ensure that you retain ownership of your car.
If you are in need of money, a title loan may be an effective way to get it. However, the application process may be slightly more complex if you don’t have a clear title on your vehicle. The good news is that it may be possible to get a loan using your title anyway. Regardless of how or why you are borrowing money, make sure that you can pay it back in a timely manner to reduce the odds of losing your car or other property.
Car Title Loan Requirements
Car title loans are secured loans. While traditional loans require applicants to pass a credit check prior to approval, all you need to get a car title loan is a title to a car you own.
Each state has its own laws regarding car title loans, with some states outlawing them altogether. That said, the basic requirements for getting an auto title loan are the same in all the states that allow vehicle title loans. These are:
- You must own a car.
- You must be at least 18 years old.
- You must be a legal resident of the U.S.A.
- You must have verifiable income.
Car Title Requirements
The title to the car you own must be in your own name. Additionally, the car it belongs to must be completely paid off. In most cases, the title must be clean but you may be able to qualify for salvage title loans if your car is in excellent condition and the office you apply with specializes in loans on salvage titles. You may also be able to qualify for an auto title loan if you still have one or two payments left on your car.