Can I Get a Title Loan on a Car That’s Still Being Financed?
If you need quick cash, however, if you still owe money for your car loan, you might wonder if you are eligible for a title loan. This is a common concern for vehicle owners who are dealing with monthly payments but need emergency cash.
With the help of a title loan, you are able to get a short-term loan in exchange for your car’s title. However, when your vehicle is already under financing, things might get a little complicated. In this blog, we learn whether it is possible to get a title loan on a financed car. So, let’s begin!
What Is a Title Loan?
A title loan is a type of loan that allows you to borrow money by using your car’s title as collateral. You temporarily give a lien on your car’s title as collateral to the lender until you repay the loan. However, if you fail to repay on time, the lender has the right to repossess your vehicle.
Can You Get a Title Loan on a Financed Car?
Yes, you might be able to get a title loan on a car that is still being financed. However, the process may not be as straightforward. When a car is being financed, the original lender holds the title until you repay the loan, which means there is already a lien on the vehicle.
Under these circumstances, a second lender must agree to have another lien on your car. The second lender evaluates how much equity you have in the vehicle before granting the loan. However, it is important to understand that not all lenders allow title loans on financed cars, and those who do might have strict repayment terms.
Most states prohibit multiple liens on one vehicle. If allowed, the lender may impose higher interest rates.
What Lenders Consider Before Approving?
Before approving a title loan on a financed car, there are several key factors that lenders assess. Here are the main things that lenders look at:
Equity in Your Car:
Before approving your loan, lenders calculate how much equity you have. They subtract the remaining balance from your car’s market value. The more equity you have in your vehicle, the higher your chances are for loan approval.
Vehicle’s Market Value:
The overall conditions, age, mileage, and model of your car are also taken into account. Lenders use the market value to determine the maximum loan amount.
Existing Balance:
Lenders might deny the loan if your remaining balance is too much or if you have very little equity left.
Lienholder Agreement:
Before approving a loan for a financed car, your new lender might need permission from your current lender to place a second lien. However, you must know that most primary lenders don’t approve a second lien in most cases.
Repayment Ability:
Your lender may review your financial stability before approving your loan. This is to make sure you can manage both your current and new loan repayments.
Final Thoughts
Getting a title loan on a car that is still being financed is possible, however, it might not be a straightforward and easy process. You have to find a lender who is willing to work with financed cars.
A title loan may offer you fast cash, however, it is also important to understand its potential downsides, like high interest rates and short repayment schedules. For expert guidance, you can contact Advantage Finance Title Loans. Call us now at (281) 410-5337 and seek advice from a trusted financial professional.