Can You Get a Title Loan on a Financed Car?

Yes, you can get a title loan on a financed car. The process is more complex than with a fully paid-off car, but can you get a title loan on a financed car? It is possible. In fact, depending on your vehicle’s equity and the lender’s policies, you might be able to secure a title loan for up to $50,000¹.

Key Takeaways

• You can get a title loan on a financed car, but the title loan company will become a lienholder on your vehicle until the loan is repaid.
• Eligibility for a title loan depends on your car’s equity, your income stability, and less heavily on your credit history¹.
• Before getting a title loan, be aware of the risks like high fees and potential vehicle repossession if you default on payments⁴.

Understanding Title Loans on Financed Cars

A car title loan is a short-term, secured loan that uses your vehicle as collateral. This loan typically requires repayment within 30 days, though some lenders offer longer terms. The primary allure of a title loan is its speed and ease of access, making it a viable option for those in urgent need of funds. In many cases, you may receive the funds on the same business day². 

But what if you still owe money on your car? Can you get a title loan on a financed car? The answer is a resounding yes.

When you get a title loan on a financed car, the process is a bit more complex. Essentially, the title loan company becomes a lienholder on your vehicle, meaning they have a legal right to your car’s title until the loan is repaid. This doesn’t mean you lose access to your vehicle; you can continue to drive it as usual while making payments on both your existing car loan and the car title loan. 

However, it’s crucial to understand that failing to repay the title loan could result in the lender seizing your vehicle⁴.

Not all title loan companies accept financed cars as collateral. Policies vary among lenders, so financing through a dealership or bank can increase your chances of obtaining an auto title loan.

Eligibility Criteria for Title Loans with Financed Vehicles

Securing a title loan on a financed vehicle is feasible, but certain criteria must be met. The primary factors that influence your eligibility include the vehicle’s current equity, your ability to repay the loan, and your credit history¹.

Knowing these criteria can help you prepare a strong application and improve your chances of approval.

Vehicle Equity and Value

The cornerstone of your eligibility for a title loan on a financed car is the vehicle’s equity. Equity is essentially the difference between the car’s market value and the amount you still owe on it. Positive equity means your car’s title is worth more than what you owe, making you eligible for a loan. For instance, if your car’s market value is $10,000 and you owe $4,000, you have $6,000 in equity.

Lenders will also consider the car’s make, model, year, condition, and mileage when determining its value. Using online valuation tools or consulting a dealership can help you ascertain your vehicle’s market value. The more valuable your car, the higher the potential loan amount.

Income and Repayment Ability

Another key aspect of eligibility is showing your ability to repay the loan. Lenders require proof of stable income, which could include recent pay stubs, tax returns, or bank statements. This is to ensure that you can manage the monthly payments without undue financial strain¹.

Assess your current financial obligations before committing to a title loan. If your income is significantly higher than your outstanding car loan and your existing loan, it can positively influence your eligibility. Title lenders need assurance that you have a stable income source to meet the repayment terms.

Credit History Considerations

While credit history is a factor in the approval process, it is not as critical as the vehicle’s value and your ability to repay the loan. Most title loan lenders do not prioritize credit scores, focusing instead on the car’s worth and your repayment capacity¹.

Car title loans remain accessible even to those with bad credit, including options like auto title loans and car title loans.

Required Documentation for Title Loan Applications

To apply for a title loan, you’ll need to gather several key documents:

• Original vehicle title (must show you as the sole owner)
• Government-issued ID (matching the name on the title)
• Proof of residency (e.g., utility bill)
• Current vehicle registration
• Evidence of vehicle insurance
• References (names, phone numbers, and addresses of at least two contacts)
• Proof of income (e.g., recent pay stubs)

How Much Can You Borrow with a Title Loan on a Financed Car?

The amount you can borrow with a title loan on a financed car largely depends on your vehicle’s equity. Lenders typically offer loans ranging from 25% to 50% of the car’s current market value, which can affect the title loan amount. For example, if your car is worth $10,000, you might be able to borrow between $2,500 and $5,000¹.

Factors such as the vehicle’s age, condition, and depreciation also play a role in determining the loan amount. If your car’s value has significantly depreciated, the lender may offer a lower loan amount.

If you owe more on your car than it is worth, you do not have equity, and borrowing might not be possible⁴.

The Application Process for Title Loans on Financed Cars

Applying for a title loan on a financed car can be done in person, online, or over the phone². The process typically starts with a loan inquiry where you provide basic information about your vehicle, your financial situation, and any existing auto loan.

Depending on the lender, you may need to undergo a vehicle inspection, which can be done in person or by submitting photos. Once the inspection is complete and the documents are verified, you can receive the funds, often within the same business day².

Finding the Right Title Loan Company

Choosing a reliable title loan company is crucial for a safe borrowing experience. Start by researching different lenders online and reading customer reviews on platforms like Trustpilot or the Better Business Bureau.

A reputable title lender ensures fair terms and a more positive loan experience⁴.

Risks and Considerations Before Taking Out a Title Loan

Car title loans can provide quick financial relief but come with significant risks. The primary risk is vehicle repossession if you default. Additionally, high fees and interest rates can make repayment challenging⁴.

Potential Repossession Risks

Defaulting can result in the lender repossessing your vehicle. Make timely payments and communicate with your lender if you face financial difficulties⁴.

Comparing Interest Rates and Fees

Compare rates and fees from different lenders to find the best deal. Choose lenders with positive reviews to ensure competitive rates and fair terms¹.

Paying Off Your Title Loan

Repaying your title loan on time is crucial to avoid extra charges and the risk of losing your vehicle. Once the loan is fully paid off, the lender will remove the lien on your car’s title, restoring full ownership to you. Timely payments help maintain financial stability and prevent the severe consequence of vehicle repossession⁴.

Summary

In conclusion, obtaining a title loan on a financed car is a viable option for those in need of quick cash but comes with its own set of risks and requirements. By understanding the eligibility criteria, application process, and potential risks, you can make an informed decision. Remember, timely repayment is key to maintaining control of your vehicle and financial health⁴.

If you’re considering this option, fill out our request form to see how much you can get with no obligations. This step can provide you with clarity on your borrowing potential and help you plan your next financial move effectively².

Frequently Asked Questions